JVc^yfi 



J K 7^' 



THE 



CHARACTER AND LOGICAL METHOD 



POLITICAL ECONOMY. 



U^\\\o^ 



\ 



Br J." E. CAIRNES, LL.D., 

EMEEITUO PEOFESSOK OF POLITICAI. ECONOMY IN TTNIVEESITT COLLEGE, LONDON, 
AUXnOB OF " BOME LEADING PBINCirLES OF POLITICAL 
» EOONO.MY, NEWLY EXPOUNDED. " 




NEW YOEK: 

HARPER & BROTHERS, PUBLISHERS, 

FRANKLIN SQUARE. 
1875. 



eiFT 

' ESTATE OF 
WILLIAM C- ««VE^' 









PREFACE TO SECOND EDITION. 

In offering to the public a new edition of some lect- 
ures delivered in Dublin more than seventeen years 
ago, a few words of explanation are needed. As re- 
gards the substance of the opinions advanced — the 
view taken of Political Economy, and of its methods 
of proof and development — the present work does not 
differ from its predecessor; but extensive changes have 
been made in the form and treatment. Numerous 
passages have been recast; increased prominence has 
been given to aspects of the case only touched on in 
the former volume ; and some entirely new topics have 
been introduced. To one of these — " Definition " — an 
additional lecture has been devoted. I would fain hope 
that in its new shape the work will be found somewhat 
less unworthy than in its earlier form of such favor as 
it has met with. No one, however, can be more con- 
scious than the author how very far it still falls short 
of what such a work ought to be. 

In connection with logical method, a good deal of 
discussion has of late taken place on a question that 
had been but little heard of when the book first ap- 



iv PREFACE TO SECOND EDITION. 

peared — I mean the employment of Mathematics in the 
development of economic doctrine. The position then 
taken with reference to this point was that, having re- 
gard to the sources from which Political Economy de- 
rives its premises, the science does not admit of mathe- 
matical treatment. Since that time, my friend Profess- 
or Jevons has published an able work (" The Theory 
of Political Econ-omy "), in which the opposite opin- 
ion is maintained ; and some few others, both here and 
on the Continent of Europe, have followed in his track- 
Having weighed Professor Jevons's argument to the 
best of my ability, and so far as this was possible for 
one unversed in Mathematics, I still adhere to my orig- 
inal view. So far as I can see, economic truths are not 
discoverable through the instrumentality of Mathemat- 
ics. If this view be unsound, there is at hand an easy 
means of refutation — the production of an economic 
truth, not before known, which has been thus arrived 
at ; but I am not aware that up to the present any 
such evidence has been furnished of the efficacy of the 
mathematical method. In taking this ground, I have 
no desire to deny that it may be possible to employ 
geometrical diagrams or mathematical formulte for 
the purpose of exhibiting economic doctrines reached 
hy other jpaths j and it may be that there are minds 
for which this mode of presenting the subject has ad- 
vantages. What I venture to deny is the doctrine 



PREFACE TO SECOND EDITION. y 

Avbich Professor Jevons and others have advanced — 
that economic knowledge can he extended hy such 
means ; that Matliematics can he applied to the devel- 
opment of economic truth, as it has been applied to the 
development of mechanical and physical truth ; and, 
nnless it can he shown eitlier that mental feelings ad- 
mit of being expressed in precise quantitative forms, 
or, on the other hand, that economic phenomena do not 
depend upon mental feelings, I am nnable to see how 
this conclusion can be avoided. " The laws of Politic- 
al Economj'," says Mr. Jevons, " must be mathematical 
for the most part, because they deal with quantities and 
the relations of quantities." If I do not mistake, some- 
thing more than this is needed to sustain Mr. Jevons's 
position. 

I have retained most of the discussions in the original 
notes, although some of the questions discusged have lost 
much of the practical interest they once had ; what was 
formerly speculation having in some instances become 
realized fact. They will not on this account, however, 
serve less well the purpose of their first introduction — 
that of illustrating the principles of economic method. 

It falls to me once again to have to express my deep 
obligations to my friend Professor Nesbitt, who, with his 
usual kindness in correcting the proofs, has not a little 
lightened my present labors. j_ ^ Cairnes. 

KiDBROOK Park Road, S.E., Feb., 1S75. 



PREFACE TO FIRST EDITION. 

One of the conditions attaclied to the Whately Pro- 
fessorship of Political Economy requires that at least 
one lecture in the year shall be published by the Pro- 
fessor. In the following pages I have ventured consid- 
erably to exceed this requirement, the subject which I 
selected as most appropriate for my opening course not 
being such as could be conveniently compressed within 
a single lecture. 

With respect to the views advanced in this work, it 
may be well, in order to prevent misapprehension, to 
disclaim at the outset all pretense to the enunciation of 
any new method of conducting economic inquiries. My 
aim, on the contraiy, has been to bring back the discus- 
sions of Pohtical Economy to those tests and standards 
which were formerly considered the ultimate criteria of 
economic doctrine, but which have been completely lost 
sight of in many modern publications. With a view to 
this, I have endeavored to ascertain and clearly to state 
the character of Political Economy, as this science ap- 
pears to have been conceived by that succession of 
writers of which Smith, Malthus, Kicardo, and Mill are 



viii PREFACE TO FIRST EDITION. 

the most distinguished names ; and from the character 
thus ascertained to deduce the logical method appropri- 
ate thereto ; -while I have sought further to fortify the 
conclusions to which I have been led by the analogy 
of the method which in the physical sciences has been 
fruitful of such remarkable results. 

It may, perhaps, be thought that it would have con- 
duced more to the advantage of economic science if, 
instead of pausing to investigate the logical principles 
involved in its doctrines, I had turned those principles 
to practical account by directing investigation into new 
regions. To this I can only reply that the contrarieties 
of opinion at present prevailing among writers on Po- 
litical Economy are so numerous and so fundamental, 
that, as it seems to me, no other escape is open to econo- 
mists, from the confusion and the contradictions in 
which the science is involved, than by a recurrence to 
those primary considerations by which the importance 
of doctrines and the value of evidence are to be deter- 
mined. To disregard this conflict of opinion, and to 
proceed to develop principles the foundations of w^hich 
are constantly impugned, would be to prosecute inquiry 
to little purpose. 

The discussion of economic method with a view to 
this object has rendered it necessary for me to refer 
principally to those questions on which opinion is at 
present divided ; and in doing so I have been led fre- 



PREFACE TO FIRST EDITION. J^ 

quently to quote from recent writers for the purpose 
simply of dissenting from their doctrines. This course, 
which I would gladly have avoided had it been com- 
patible with the end in view, has given to portions of 
these lectures more of a controversial character than is, 
perhaps, desirable. 

I feel also that some apology is due for the number 
and the length of the notes. As I have just stated, the 
nature of the subject required frequent reference to 
disputed topics. To have met the current objections 
to the principles which I assumed by stopping on each 
occasion to discuss them in the text, would have incon- 
veniently broken the sequence of ideas, and hopelessly 
weakened the force of the e-eneral argument. On the 
other hand, to have wholly passed them by without no- 
tice would, perhaps, have been still more unsatisfactory 
to those who were disposed to adopt such objections. I 
should thus have been guilty of the imprudence of a 
commander who invades a country leaving numerous 
untaken fortresses in his rear. Under these circumstan- 
ces I have had recourse to the only other alternative — 
that of transferring sucli discussions to the notes, or, 
where the argument is too long for a note, to an ap- 
pendix. 

****** 

J. E. Cairnes. 



A2 



CONTENTS. 



LECTURE I 

INTEODUCTOEY. 

PAGE 

§ 1. Unsettled condition of Political Economy as to its main doc- 
trines 19 

Traceable chiefly to the influence exerted by the practical 

successes of the science on its method 22 

§ 2. Political Economy — " the Science of Wealth " 25 

Reasons for this limitation of the inquiry 28 

M. Say's views considered 30 

§ 3. Significance of the term "science" in the definition of Political 

Economy 33 

Meaning of the expression " laws of the phenomena of 
wealth " 3r> 

Neutral attitude of Political Economy in presence of com- 
peting systems of social or industrial life 36 

Indefinitely progressive nature of economic investigation 3'J 

Practical evils which have resulted from ignoring the scien- 
tific character of this stud v 41 



LECTURE IL 

OF THE MENTAL AND PHYSICAL TEEMISES OF POLITICAL 

ECONOMY, AND OF THE LOGICAL CHAEACTEE OF 

THE DOCTEINES THENCE DEDUCED. 

§ 1 . Position occupied by economic speculation in relation to the two 

great departments of existence — matter and mind 43 

Views on this point of IMr. Mill and of Mr. Senior 44 



xii CONTENTS. 

PAGn 

Criticism of these views 4-7 

Political Economy neither a purely mental nor a purely phys- 
ical inquiry, but referable to a class of studies intermediate 

between mental and physical inquiries 52 

Proper limits of economic inquiry 63 

§ 2. Mentat and physical premises of Political Economy TA 

Secondary influences 57 

How far should moral and religious considerations be taken 

account of in economic investigation 59 

§ 3. Discussion of the question whether Political Economy is a 

" positive " or a " hypothetical " science GO 

Mr. Senior's view criticised 05 



LECTURE in. 

OF THE LOGICAL METHOD OF POLITICAL ECONOMY. 

§ 1. Common notion that economic investigation should be con- 
ducted according to the " inductive method " 72 

Latitude of meaning with which the expression ' ' inductive 

method " has been employed by authoritative writers 74 

Examination of the doctrine that " induction," in the strict 

sense of the term, is the true path of economic inquiry 7G 

§ 2. Logical position of the speculator on the physical universe at 

the outset of physical inquiry 81 

The method of induction (as distinguished from deduction) 

imperative at this stage 84 

Eeason of this 85 

§ 3. This reason does not hold in economic investigation, because 
the ultimate principles of Political Economy, being the 
conclusions and proximate phenomena of other branches 

of knowledge, admit of direct proof. 87 

§ 4. The economist excluded from the use of experiment, but has at 

his disposal an inferior substitute 89 

Place of hypothesis in economic reasoning 90 

Use of this expedient by Eicardo 93 

Place of hypothesis in physical investigation 94 

§ 5. Place of statistics in economic reasoning 97 



CONTENTS. 



XIU 

PAGE 



In no respect different from that in which they stand to other 
sciences which, like Pohtical Economy, have reached tlie 
deductive stage 97 



LECTURE IV. 

OF THE LOGICAL METHOD OF POLITICAL ECONOMY. — 

(^Continued.^ 

§ 1. The method of Political Economy inculcated in the preceding 
lecture the same which has, in fact, been followed by the 

leading authorities in the science 100 

Mr. Tooke's method in monetary investigation 101 

§ 2. Analysis of the doctrine that " cost of production regulates the 

value of freely produced commodities " lO-l 

Nature of the evidence by which an economic law is estab- 
lished or refuted 110 

§ 3. Illustrations— from the ' ' Wealth of Nations '' Ill 

" from Kicardo's works 115 

LECTURE V. 

OF THE SOLUTION OP AN ECONOMIC PROBLEM, AND OF 

THE DEGREE OF PERFECTION OF WHICH 

IT IS SUSCEPTIBLE. 

§ 1. Circumstances in which an economic law, regarded logically, 
differs from a law in the more advanced physical sciences 

— unsusceptibility of precise quantitative statement 118 

[Note. — Mr. Macleod's and Mr. Jennings's view] 120 

Unprecise character of economic laws illustrated by the the- 
ory of the decline of profits 1 22 

And by the variations in the price of food 125 

And by the effects of changes of taxation on -consumption 127 

§ 2. Consequence of the unprecise character of economic laws as af- 
fecting the solution of economic problems 129 

Illustrations — drain of silver to the East in 1856 132 

" high price of corn during the four years 1853 
to 185G inclusive 1.33 



xiv CONTENTS. 

PAG 13 

§ 3. Prevalent ignorance as to what the sohition of an economic 

problem means 1 34 

Illustrations \yide also notes] 135 



LECTURE YI. 

OF THE PLACE AND PURPOSE OF DEFINITION IN POLIT- 
ICAL ECONOMY. 

§ I . Definition in positive science embraces two operations — classifi- 
cation and naming 143 

Preliminary difficulty 1 43 

How to be dealt with 144 

§ 2. Danger of too great rigidity in nomenclature — Sir John Her- 

schel 144 

Paucity of definitions in the writings of the early investi- 
gators in Political Economy the result of a sound dis- 
cretion 145 

In the present state of science definitions are needed 145 

§ 3. The objection to a definition that it is founded on an attribute 

admitting of degrees not valid 147 

§ 4, Mr. Mill's aphorism respecting the rule which should guide us 

in choosing a nomenclature 149 

Nomenclature in Political Economy ought to be significant. .. 150 
Nomenclature in chemistry at once significant and technical. 151 
How far similar excellence in its nomenclature is attainable 

by Political Economy 153 

Twofold remedy for unavoidable defects 154 

§ 5. General results of the discussion 155 



LECTURE VII. 

OP THE MALTHUSIAN DOCTRINE OF POPULATION. 

§ 1. Statement of the Malthusian doctrine ] 57 

Logical process by which Malthus established it 159 

\_Note. — Objection that the doctrine, though true in the ab- 
stract, is without practical importance, considered] 160 



CONTENTS. XV 

PAGE 

§ 2. Important consequences, theoretical and practical, flowing from 

the doctrine 164 

[Note. — Misrepresentations of Malthus] 167 

§ 3. Mr. Eickards's argument against the position of Malthus con- 
sidered 170 

The objection taken is not inconsistent with the truth of the 
Malthusian view 1 72 

On the other hand, the conclusions contended for by Mr. 
Eickards might have been accepted by Malthus 173 

The issue for consideration, therefore, is not as to the truth, 
but as to the pertinency, with reference to economic ends, 
of the positions respectively of Malthus and of his critic 174 

INIr. Eickards's doctrine " as to the natural ascendency of the 
force of production over the force of population " ex- 
amined 182 

§ 4. Further proof of the irrelevancy of Mr. Eickards's argument 
furnished by his practical maxims, which are in eflect 

Malthusian 183 

Charge against Malthus that his doctrine implies a "miscal- 
culation of means to ends in the arrangements of the 
universe " 18G 



LECTURE VIII. 

OF THE THEORY OF EEXT. 

§ 1 . The purpose of a theory of rent is to explain the fact of rent ... 188 

' ' Economic rent " defined 1 90 

Theory of the Pliysiocrats 191 

In what respect it fiuled to solve the problem 192 

Adam Smith's contribution to the doctrine as left by tlie 

Physiocrats 192 

In what respect the doctrine, as thus enlarged, still failed to 

solve the problem 193 

The true solution first suggested by Dr. Anderson, and first 

fully expounded by Eicardo 103 

§ 2. Statement and proof of Eicardo 's theory of rent 195 

§ 3. Phenomena of rent which are not covered by Eicardo's the- 

orv "! 201 



Xvi CONTENTS. 

PAG15 

Such instances are of the nature of "residual phenomena ". . 202 
The cause of rent in all such cases is monopoly 205 

§ 4, Is it possible to embrace all the facts of rent under a single 

principle — say the principle of monopoly ? — discussed 206 

The incidents of rent, in relation to price, taxation, and other 
influences, vary according to the source from which it 

arises 207 

§ 5. Mr. Eickards's argument against " the diminishing productive- 
ness of the land " 212 

The issue raised is not as to the truth of the doctrine, but as 
to its pertinency with reference to the ends of economic in- 
vestigation 214 

Mr. Eickards's criticism in effect impugns the whole received 

system of inductive philosophy 217 

And is tantamount to abandoning the scientific pretensions 
of Political Economy 218 



APPENDICES. 

Appendix A 223 

Appendix B 229 

Appendix C 234 



THE 



CHARACTER AND LOGICAL METHOD 



POLITICAL ECONOMY. 



THE CHAEACTER AND LOGICAL METHOD 

OF 

POLITICAL ECONOMY. 



LECTURE I. 

INTRODUCTORY. 

§ 1. In commencing a course of lectm'es on Political 
Economy, it is usual and natural to indulge in some con- 
gratnlatoiy remarks on the progress of the science in re- 
cent times, and more particularly on the satisfactory re- 
sults which have attended the extensive, though as yet 
but partial, recognition of its principles in the commer- 
cial and financial codes of the country. It is, indeed, not 
easy to exaggerate the importance of these latter achieve- 
ments, and it is certainly true that economic doctrines 
liave in recent years received some useful developments 
and corrections ; at the same time I think it must be ad- 
mitted that, on the whole, the present condition and 
prospects of the science are not such as a political econ- 
omist can contemplate w^ith unmixed satisfaction. 

It is now a quarter of a century since Colonel Torrens 
wrote as follows : " In the progress of the human mind, 
a period of controversy among the cultivators of any 
branch of science must necessarily precede the period 



20 LOGIC OF POLITICAL ECONOMY. 

of unanimity. With respect to Political Economy, the 
period of controversy is passing away, and that of una- 
nimity rapidly approaching. Twenty years hence there 
will scarcely exist a doubt respecting any of its funda- 
mental principles." * Five-and-thirty years have now 
passed since this unlucky prophecy was uttered, and yet 
such questions as those respecting the laws of popula- 
tion, of rent, of foreign trade, the effects of different 
kinds of expenditure upon distribution, the theory of 
prices — all fundamental in the science — are still unset- 
tled, and must still be considered as " open questions," 
if that expression may be applied to propositions whicli 
are still vehemently debated, not merely by sciolists and 
smatterers, wlio may always be expected to wrangle, 
but by the professed cultivators and recognized ex- 
pounders of the science.^ So far from the period of 
controversy having passed, it seems hardly yet to have 
begun — controversy, I mean, not merely respecting 
propositions of secondary importance, or the practical 
application of scientific doctrines (for such controversy 
is only an evidence of the vitality of a science, and is a 
necessary condition of its progress), but controversy re- 
specting fundamental principles which lie at the root of 
its reasonings, and which were regarded as settled wlien 
Colonel Torrens wrote. 

This state of instability and uncertainty as to funda- 
mental propositions is certainly not favorable to the suc- 
cessful cultivation of Political Economy — it is not pos- 
sible to raise a solid or durable edifice upon shifting 
quicksands ; besides, the danger is ever imminent of re- 

' " Essay on the Production of "Wealth," Introduction, p.xiii. 1821. 
* Vide Appendix A. 



INTRODUCTORY. 21 

viving that skepticism respecting all economic specula- 
tion which at one time so much impeded its progress. 
It would, indeed, be vain to expect that Political Econo- 
my should be as rapidly and steadily progressive as the 
mathematical and physical sciences. Its close affinity 
to the moral sciences, as has been often pointed out, 
brings it constantly into collision with moral feelings 
and prepossessions which can scarcely fail to make them- 
selves felt in the discussion of its principles ; while its 
conclusions, intimately connected as they arc M'itli the 
art of government, have a direct and visible bearing 
upon human conduct in some of the most exciting pur- 
suits of life. Add to this that the technical terms of 
Political Economy are all taken from popular language, 
and inevitabl}'^ partake, in a greater or less degree, of 
the looseness of colloquial usage. It is not, therefore, 
to be expected that economic discussions should be car- 
ried on with the same singleness of purpose, or severity 
of expression and argumentation — consequently with 
the same success — as if they treated of the ideas of 
number and extension, or of the properties of the ma- 
terial universe. 

Such considerations will, no doubt, account for much 
of the instability and vicissitude which have marked the 
progress of economic inquiry; but I do not think they 
are sufficient to explain the present vacillating and un- 
satisfactory condition of the science in respect to funda- 
mental principles. To understand this, I think we must 
advert to circumstances of a more special character, and 
more particularly to the effect which the practical suc- 
cesses achieved by Political Economy (as exemplified in 
the rapid and progressive extension of the commerce of 



22 LOGIC OF POLITICAL ECONOMY. 

the country since the adoption of free trade) have had 
on the method of treating economic questions. 

When Pohtical Economy had nothing to recommend 
it to public notice but its own proper and intrinsic evi- 
dence, no man professed himself a political economist 
who had not conscientionsly studied and mastered its ele- 
mentary principles ; and no one who acknowledged him- 
self a political economist discussed an economic problem 
without constant reference to the recognized axioms of 
the science. But when the immense success of free trade 
gave experimental proof of the justice of those principles 
on which economists relied, an observable change took 
place both in the mode of conducting economic discus- 
sions, and in the class of persons who attached themselves 
to the cause of Political Economy. Many now enrolled 
themselves as political economists who had never taken 
the trouble to study the elementary principles of the sci- 
ence ; and some, perhaps, whose capacities did not en- 
able them to appreciate its evidence ; while even those 
who had mastered its doctrines, in their anxiety to pro- 
pitiate a popular audience, were too often led to abandon 
the true grounds of the science, in order to find for it in 
the facts and results of free trade a more popular and 
striking vindication.^ It was as if mathematicians, in 
order to attract new adherents to their ranks, had con- 
sented to abandon the method of analysis, and to rest the 

^ See an article in the Edinburgh Review, April, 1854, on " The Con- 
sumption of Food in the United Kingdom," and compare this with the 
celebrated "Merchants' Petition" of 1820, the production of Mr.Tooke. 
With reference to the fonner I may quote the remark of Mr. Tooke : "It 
is necessary, even in setting forth the successes of a just policy, that no 
violence should be done to established modes of reasoning, or to the facts 
of the case as they really exist." 



INTRODUCTORY. 23 

truth of their formulas on the correspondence of the al- 
manacs with astronomical events. The severe and loscical 
style -which characterized the cultivators of the science in 
the early part of the century has thus been changed to 
suit the different character of the audience to whom 
economists now address themselves. The discussions of 
Political Economy have been constantly assuming more 
of a statistical character ; results are now appealed to in- 
stead of principles ; the rules of arithmetic are super- 
seding the canons of inductive reasoning;' till the true 
course of investigation has been well-nigh forgotten, and 
Political Economy seems in danger of realizing the fate 
of Atalanta, 

"Decliuat cursus, auriimque volubile toliit." 

It has been remarked by Mr. Mill that " in whatever 
science there exist, among those who have attended to 
the subject, what are commonly called differences of 
principle, as distinguished from differences of matter of 

' The error as to method complained of is tlie opposite of that of " an- 
ticipatio naturae," wliich was the bane of science when Bacon wrote, and 
against which his most vigorous attacks were directed. Nevertheless (and 
it is a proof as well of the philosophic sagacity for which he was so distin- 
guished, as of the perfect sobriety of his mind), the great reformer was not 
so carried away by his opposition to the prevailing abuse as to overlook 
the danger of its opposite. In the following passage he describes with 
singular accuracy both the error itself, to which 1 have adverted, and the 
causes of it. " Quod si etiam scientiam quandam, et dogmata ex expe- 
rimentis moliantur ; tamen semper fere studio prcepropero et intempes- 
tivo deflectunt ad praxin : non tantum propter usum et fructum ejusmodi 
praxeos ; sed ut in opere aliquo novo veluti pignus sibi arripiant, se non 
inutiliter in reliquis versaturos : atque etiam aliis se venditent, ad existi- 
mationem vieliorem comparandam de iis in quibus occupati sunt. Ita fit, 
ut, more AtalantEe, de via decedaiit ad tollendum aureum pomum ; interim 
vero cursum interrumpant, et victoriam emittant e manibus.'' — "Novum 
Organum," lib. i. aph. 70. 



24 LOGIC OF POLITICAL ECONOMY. 

fact or detail, the cause will be found to be a difference 
in their conceptions of the philosophic method of the sci- 
ence. The parties who differ are guided, either know- 
ingly or unconsciously, by different views concerning 
the nature of the evidence appropriate to the subject.'" 
ISTow this appears to me to be strikingly the case with re- 
spect to those " differences of principle " to which I have 
adverted as at present existing among economists ; and, 
therefore, I think I can not better carry out the views 
of the liberal founder of this chair than by availing my- 
self of the opportunity which the opening of this course 
affords of considering at some length the nature, object, 
and limits of economic science, and the method of in- 
vestigation proper to it as a subject of scientific study. 

In discussing the nature, limits, and proper method of 
Political Economy, I shall at once pass over those nu- 
merous prepossessions connected with the study of this 
science — some of a moral, some of a religious, and some 
of a psychological nature — which so much impeded its 
early advances. To enter at any length into such con- 
siderations would be to occupy your time in traveling 
over ground which probably you have already traversed, 
or which, at all events, it is in your power to traverse, 
in other and more edifying company ; and to waste my 
own in combating objections which either have ceased 
to exist, or, if they still exist, exist in spite of repeated 
refutations — refutations the most complete and irrefrag- 
able, to which I could hope to add nothing of point or 
weight, and which I should only weaken by translating 
them into my own language.^ 

' "Essays on some Unsettled Questions of Political Economy," p. 141. 
* See particularly Whately's "Introd. Lectures on Political Economy." 



INTRODUCTORY. 25 

I shall, therefore, at starthig tahe it for granted that 
" wealth," the subject-matter of Political Economy, is 
susceptible of scientific treatment; that there ai^e laws 
of its production and distribution ; that mankind in their 
industrial operations are not governed by mere caprice 
and accident, but by motives which act extensively and 
constantly — which may, therefore, be discovered and clas- 
sified, and made to serve as the principles of subsequent 
deductions. I shall further take it for granted that a 
knowledge of these laws of the production and distribu- 
tion of wealth is a desirable and useful acquisition, both 
as a part of a liberal education, and for the practical 
purposes to which it may be applied ; and, further, that 
this knov,'ledge is more likel}^ to be obtained by cai'eful 
and systematic inquiry than by what is called the com- 
mon-sense of practical men — another name for the crude 
guesses of nnmethodized experience ; and, lastly, I shall 
assume that the study of those principles and motives of 
human conduct which are brought into play in the pur- 
suit of wealth is not incompatible with the sentiments 
and duties of religion and morality. 

§ 2. The question of the proper definition of Political 
Economy will come more fitly under our consideration 
after we have ascertained with some precision the char- 
acter of the inquiry — that is to say, its purpose and the 
conditions under w^liich this is sought to be accomplished. 
Even here, however, it may be well to refer to so much 
as may be fairly said to be agreed upon in connection 
with the subject of definition — agreed upon not indeed 
by all who discourge on economic questions (for on what 
are they agreed ?), but at least by the school of econo- 

B 



2G LOGIC OF POLITICAL ECONOMY. 

mists of whom Adam Smitli may be I'egarded as the 
founder, and J. S. Mill as the latest and most distin- 
guished expositor. So far as I know, all writers of this 
school, however they may differ as to the primary as- 
sumptions of Political Economy, or the method by which 
it ought to be cultivated, at least agree in describing it 
as the Science of Wealth. Now this implies agreement 
upon other points of considerable importance to which 
I desire to call your attention. 

According to this view, then, you will observe that 
wealth constitutes the proper and exclusive subject-mat- 
ter of Political Economy — that alone with which it is 
primarily and directly concerned. The various objections 
of a popular kind which have been advanced against the 
study upon the ground, as it has been phrased, of its 
" exclusive devotion to wealth," it is not mv intention to 
notice at any length, for reasons which have been already 
assigned. I shall only remark that these objections al- 
most all resolve themselves into this — that there are mat- 
ters of importance which are not included wnthin the 
range of Political Economy — an objection which seems 
to proceed upon the assumption that Political Economy 
is intended as a general curriculum of education, and 
not as a means of eliciting truths of a specific kind.' 
Thus a late writer in the North British Review speaks 



' "Que reconomie politique ne s'occnpe que des interets de cette vie, 
c'est une chose e'vidente, avouee. Chaque science a son objet qui lui est 
propre. Si elle sortait de ce monde, ce ne serait plus de I'e'conomie poli- 
tique, ce serait la theologie. On ne doit pas plus lui demander compte de 
ce qui se passe dans une monde meilleur, qu'on ne doit demander a la 
physiologie comment s'opere la digestion dans I'estomac des anges."^ — • 
"Cours Complet d'Economie Politic ue," par J. B. Say, torn. i. p. 48, troi- 
sieme edition. 



IXTRODUCTORY. 27 

sliglitiugly of Political Economy as " a fragmentary sci- 
ence." Kow what is the value of this objection ? Does 
tlie writer mean that Political Economy is a fragment 
of nniversal knowledge ? This may he granted, and yet 
the point of the objection be still not very apparent, un- 
less we suppose that he designed to advocate some "great 
and comprehensive science," such as that which Thales 
and his contemporaries had in view when they inquired, 
"What is the origin of all things?" Indeed, if the 
history of scientific progress teach any lesson more dis- 
tinctly than another, it is that human research has gen- 
erally been successful just in proportion as its objects 
have been strictl}' limited and clearly defined ; that is to 
say, in proportion as science has become " fragmentai-y." 
Passing by popular objections, it can not be denied 
that the limitation of Politiaal Economy to the single 
subject of wealth — or, to state the same idea in a differ- 
ent form, the constitution of a distinct science for tlie 
exclusive investigation of the class of phenomena called 
economic — has been objected to by writers of authority 
and reputation. Perhaps the most distinguished of those 
who have taken this view has been M. Comte. Accord- 
ing to him all the various phenomena presented by soci- 
ety — political, jural, religious, educational, artistic, as well 
as economic— ought to be comprised within the range of a 
single inquiry, of which no one branch or portion ought 
to be studied except in constant connection wutli all the 
rest. I havie elsewhere discussed this doctrine of M. 
Comte's at considerable length, and need not, there- 
fore, do more than refer to it here.' Other writei-s, how- 

' See "Essays in Political Economy, Theoretical and Applied." — M. 
Comte and Political Economv. 



28 LOGIC OF POLITICAL ECONOMY. 

ever, of whom M. Say is one, witliont adopting this ex- 
treme view, have desired to extend the boundaries of 
economic investigation beyond the limits prescribed by 
the ordinary definition, and would embrace in the same 
discussion witli the phenomena of wealth a large por- 
tion at least of the facts presented by man's moral and 
social nature. But the objections to this course appear 
to me to be fundamental and insuperable. 

In the first place, the great variety of interests and 
considerations included under the science as thus con- 
ceived would seem to render the comprehension of them 
in one system of doctrines difiicult, if not impracticable. 
But the fundamental defect in this mode of treatment 
— in the attempt to combine in the same discussion the 
laws of wealth and the laws, or a portion of the laws, of 
the moral and social nature of man — consists in this, 
that even where the subject-matter of the two inquiries 
is identical, even where the facts which they consider 
are the same, yet the relations and aspects under which 
these facts are viewed are essentially different. The 
same things, the same persons, the same actions are dis- 
cussed with reference to a different object, and, there- 
fore, require to be classified on a different principle. 

If our object, for example, were to discover the laws 
of the production and distribution of wealth, those in- 
struments of production the productiveness of which 
depends on the same conditions, and those persons whose 
share in the products of industry is governed by the 
same principles, should, respectively, be placed in the 
same categories; while, if our object were the larger 
one of social interests and relations generally, we might 
require a very different arrangement. Thus superior 



INTRODUCTORY. 



29 



mental power, regarded -vvitli a view to the production 
of \vealth, is an instrument of production perfectly anal- 
ogous to superior fertility of soil ; they are both monop- 
olized natural agents ; and the share which their owners 
obtain in the wealth which they contribute to produce 
is regulated by precisely the same principles. Men of 
genius, therefore, and country gentlemen, however little 
else they may have in common, yet being both proprie- 
tors of monopolized natural agents, would in an inquiry 
into the laws of wealth be properly placed in the same 
class. In the same way, the wages of a day laborer and 
the salary of a minister of state depend on the same 
principle — the demand for and supply of their services ; 
and these persons, therefore, so widely different in their 
social position and importance, would be included by 
the economist in the same category. On the other hand, 
farmers and landlords, wlio, with a view to social inqui- 
ries, would probably be ranked together as belonging to 
the agricultural interest, would, if our object were the 
narrow one of the discovery of the laws of wealth, be 
properly placed in different classes: the income of the 
farmer depending on the laws which regulate the rate 
of profit, M'hile that of the landlord depends on the laws 
which regulate rent ; those laws being not only not the 
same, but generally varying in opposite directions.* 

* Rent and profit possess under their superficial aspects so many attri- 
butes in common that it is not strange there sliould be a disposition to 
identify them as economic phenomena of the same l;ind. Among French 
economists in particular this view is nearly universal ; not merely M. Say 
and those who have generally followed him, but that much abler thinker 
and clearer expositor, the late M. Chevbuliez, of Geneva, having so con- 
ceived the phenomena. It may be well, therefore, to set down briefly the 
fiiets which justify the distinction. 1 . The rate of profit falls, that of rent 
rises, with the progress of society : the latter attains its maximum in old 



30. LOGIC OF POLITICAL ECONOMY. 

As I have said, M. Say is one of those writers who 
have treated Political Economy as having this larger 
scope, and nowhere are the inconveniences of the meth- 
od he pursues more distinctly brought into view than in 
his valuable treatise : indeed, it appears to me that most 
of the errors into which, notwithstanding the general 
merits of his work, he has fallen, are to be traced to this 
source. No one, I think, can peruse much of his writ- 
ings without perceiving (and the same remark may be 
made of not -a few French writers on Political Econo- 
my, and in particular of M. Bastiat) that his reasoning 
on economic problems is throughout carried on with a 
side glance at the prevalent socialistic doctrines. An. 
inevitable consequence of this is — his object being quite 
as much to defend society and property against the at- 
tacks of their enemies as to elucidate the theory of 
wealth — that questions respecting the distribution of 
wealth are constantly confounded with the wholly dif- 
ferent questions which the justification upon social 
grounds of existing institutions involves ; and thus prob- 
lems purely economic, come, under his treatment of 

communities such as England, precisely where the former attains its mini- 
mum. 2. Rent and proEt stand in different relations to price : e.g., a rise of 
agricultural prices, if permanent, would implj', other things being the same, 
a rise of rent, but it would not imply or be attended with a rise of agricult- 
ural profits ; on the contrary, agricultural profits, and profits generally, 
would most probably fall as a consequence of a rise in agricultural prices. 
3. A tax on the profits of any particular branch of industry would raise 
prices in that industry ; the receivers of profits would be thus enabled to 
transfer the burden of the tax to the consumers of the commodities they 
produce. A tax on rent would have no corresponding effect on agricult- 
ural prices, and would rest definitively on the owners of the soil. 4. Va- 
riations in rents are slow, and, as a rule, in an upward direction ; in prof- 
its, still more in interest, variations are frequent and rapid, and not in any 
constant direction. 



INTRODUCTORY. 31 

tliem, to be complicated witli considerations which are 
entirely foreign to their solution. 

Thus he tells us' that rent, interest, and wages are all 
perfectly analogous : each giving the measure of utility 
which the productive agency (of which each respectively 
is the reward) subserves in production. Eent, according 
to this theory, does not depend on the different costs at 
which, owing to the physical qualities of the soil, agri- 
cultural produce is raised, nor profit on the cost of la- 
bor, nor wages on demand and supply,^ but each on the 
utility of the functions which land, capital, and labor 
respectively perform in the creation of the ultimate 
product. Thus the distinct economic laws which regu- 
late the distribution of wealth among the proprietors of 
these three productive agencies are confounded, in order 
to introduce a moral aro;ument in defense of the exist- 
ing structure of society, and to place the three classes of 
landlord^!, capitalists, and laborers on the same footing 
of social convenience and equity. 

Dr. Whewell, in examining the cause of the-failure of 
physical philosophy in the hands of the ancient Greel^s, 
finds it in the circumstance that they introduced into 
their phj^sical speculations ideas inappropriate to the 
facts which they endeavored to solve. It was not, lie 
tells us, as is commonly supposed, that they undervalued 
the importance of facts ; for it appears that Aristotle 
collected facts in abundance ; nor yet that there was 
any dearth of ideas by which to generalize the facts 

' "Conrs Complet,"'tom. i. pp. 213-215. 

^ M. Say, it is true, in another part of his work (vol. ii. p. 4r>), states 
the law of wages correctly as depending on demand and supply, but the 
doctrine alluded to in the text is no less distinctly stated. The doctrines 
are, no doubt, irreconcilable ; but with this I am not concerned. 



32 LOGIC OF POLITICAL ECONOMY. 

wliich tliey accumulated ; but that, instead of steadily 
and exclusively lixing their attention on tlie purely phys- 
ical ideas of force and pressure, they sought to account 
for external phenomena by resorting to moral consider- 
ations — to the ideas of strange and common, natural and 
unnatural, sympathy, horror, and the like — the result, of 
course, being that their inquiries led to nothing but 
fanciful theorizing and verbal quibbling/ 

Now the introduction into economic discussions of 
such considerations as those to which I have adverted in 
the example given from M. Say appears to me to be an 
error of precisely the same kind as that which was com- 
mitted by the ancient Greeks in their physical specula- 
tions, and one to which the method adopted by M. Say, 
of embracing in the same discussion the principles and 
ends of social union with the economic laws of wealth, 
seems almost inevitably to lead. The writer who thus 
treats Political Economy labors under a constant temp- 
tation to wander from those ideas which are strictly ap- 
propriate to his subject into considerations of equity and 
expediency which are proper only to the more extensive 
subject of society. Instead of addressing himself to the 
problem, according to what law certain facts result from 
certain principles, he proceeds to explain how the exist- 

^ Sir John ITerschel's explanation of the failnre is, substantially the 
same. "Aristotle," he says, "at least saw the necessity of having re- 
course to nature for something like principles of physical science; and, 
as an observer, a collector, and a recorder of facts and phenomena, stood 
without an equal in his age. It was the fault of that age, and of the per- 
verse and flimsy style of verbal disputation which had infected all learn- 
ing, rather than his own, that he allowed himself to be contented with 
vague and loose notions drawn from general and vulgar observation, in 
]ilace of seeking carefully, in well-arranged and thorouglily considered in- 
stances, for the laws of nature." 



INTRODUCTORY. • 33 

ence of tlie facts in question is consistent with social 
-well-being and natural equity; and generally succeeds 
in deluding himself with the idea that he has solved an 
economic problem, when, in fact, he has only vindicated, 
or persuaded himself he has vindicated, a social arrange- 
ment. 

The objections, therefore, to this method of treating 
Political Economy, resting as they do on the incompati- 
ble nature of the investigations wliicli it seeks to com- 
bine, are fundamental. Even if it should be thought 
desirable to give the name of Political Economy to the 
larger inquiry, it would still be necessary to reserve for 
separate and distinct investigation the laws of the pro- 
duction and disti'ibntion of Avealth. 

§ 3. But, secondly, the ordinary definition represents 
Political Economy as a science ; and (as I have else- 
where said) " for those who clearly apprehend what sci- 
ence, in the modern sense of the term, means, this ought 
sufficiently to indicate at once its province and what it 
undertakes to do. Unfortunatelj', many who perfectly 
nnderstand what science means when the word is em- 
ployed with reference to physical nature, allow them- 
selves to slide into a totally different sense of it, or rath- 
er into acquiescence in an absence of all distinct mean- 
ing in its use, when they employ it with reference to 
social existence. In the minds of a large number of 
people every thing is Social Science which proposes to 
deal with social facts, either in the way of remedying a 
grievance, or in promoting order and progress in socie- 
ty : every thing is Political Economy which is in any 
way connected with the jiroduction, distribution, or con- 

P>2 



34: LOGIC OF POLITICAL ECONOMY. 

sumption of wealth. Now I am anxious here to insist 
upon this fundamental point : whatever takes the form 
of a plan aiming at deiinite practical ends — it may be a 
measure for the diminution of pauperism, for the reform 
of land-tenure, for the extension of co-operative industry, 
for the regulation of the currency ; or it may assume a 
more ambitious shape, and aim at reorganizing society 
nnder spiritual and temporal powers, represented by a 
high-priest of humanity and three bankers — it matters 
not what the proposal be, whether wide or narrow in its 
scope, severely judicious or wildly imprudent — if its ob- 
ject be to accomplish definite practical ends, then I say 
it has none of the characteristics of a science, and has no 
just claim to the name. Consider the case of any rec- 
ognized physical science — Astronomy, Dynamics, Chem- 
istry, Physiology — does any of these aim at definite prac- 
tical ends ? at modifying in a definite manner, it matters 
not how, the arrangement of things in the physical nni- 
verse? Clearly not. In each case the object is, not to 
attain tangible results, not to prove any definite thesis, 
not to advocate any practical plan, but simply to give 
light, to reveal laws of nature, to tell us what phenome- 
na are found together, what effects follow from what 
causes. Does it result from this that the physical sci- 
ences are without bearing on the practical concerns of 
mankind ? I think I need not trouble myself to answer 
that question. "Well, then, Political Economy is a sci- 
ence in the same sense in which Astronomy, Dynamics, 
Chemistry, Phj'siology are sciences. Its subject-matter 
is different ; it deals with the phenomena of wealth, while 
they deal with the phenomena of the physical universe ; 
but its methods, its aims, the character of its concln- 



INTRODUCTORY. 35 

sioiis, are the same as theirs. What Astronomy does for 
the phenomena of the lieavenly bodies ; wliat Dynamics 
does for the phenomena of motion ; what Chemistry 
does for the phenomena of chemical combination ; what 
Physiology does for the phenomena of the functions of 
organic life, that Political Economy does for the phe- 
nomena of wealth : it expounds the laws according to 
which those phenomena co-exist with or succeed each 
other; that is to say, it expounds the laws of the phe- 
nomena of wealth. 

" Let me here briefly explain what I mean by this ex- 
pression. It is one in very frequent use ; but, like many 
other expressions in frequent use, it does not always 
perhaps carry to the mind of the hearer a very definite 
idea. Of course I do not mean by the laws of the phe- 
nomena of wealth, Acts of Parliament. I mean the nat- 
ural laws of those phenomena. Now what are the phe- 
nomena of wealth ? Simply the facts of wealth ; such 
facts as production, exchange, price ; or, again, the vari- 
ous forms which wealth assumes in the process- of distri- 
bution, such as wages, profits, rent, interest, and so forth. 
These are tlie phenomena of wealth; and the natural 
laws of these phenomena are certain constant rela- 
tions in which they stand toward each other and toward 
their causes. For example, capital grows from 3'ear to 
3'ear in England at a certain rate of progress; in the 
United States the rate is considerably more rapid ; in 
China considerably slower. Now these facts are not 
fortuitous, but the natural result of causes ; of such 
causes as the external physical circumstances of the 
countries in question, the intelligence and moral char- 
acter of the people inhabiting them, and their political 



36 LOGIC OF POLITICAL ECONOMY. 

and social institutions; and so long as the canses remain 
the same, the results will remain the same. Similarly, 
the prices of commodities, the rent of land, the rates of 
wages, profits, and interest, differ in different countries ; 
but here again, not at random. The particular forms 
which these phenomena assume are no more matters of 
chance than tlie temperature or the mineral productions 
of the countries in which they occur are matters of 
chance; or tlian the fauna or flora which flourish on the 
surface of those countries are matters of chance. Alike 
in the case of the physical and of the economic world, 
the facts we find existing are the results of causes, be- 
tween which and them the connection is constant and 
invariable. It is, then, the constant relations exhibited 
in economic phenomena -that we have in view when we 
speak of the laws of the phenomena of wealth; and in 
the exposition of these laws consists the science of Polit- 
ical Economy. If you ask me wherein lies the utility 
of such an exposition of economic laws, I answer, in pre- 
cisely the same circumstance which constitutes the utility 
of all scientific knowledge. It teaches us the conditions 
of our power in relation to the facts of economic exist- 
ence, the means by which, in the domain of material 
well-being, to attain our ends. It is by such knowledge 
that man becomes the minister and interpreter of Xature, 
and learns to control Nature by obeying her. 

"And now I beg you to observe what follows from this 
mode of conceiving our study. In the first place, then, 
you will remark that, as thus conceived. Political Econ- 
omy stands apart from all particular systems of social 
or industrial existence. It has nothing to do with laissez- 
faire any more than with communism ; with freedom of 



INTRODUCTORY. 37 

contract any more than with paternal government, or 
with systems of status. It stands apart from all partic- 
ular systems, and is, moreover, absolutely neutral as be- 
tween all. Xot of com'se that the knowledge which it 
gives may not be employed to recommend some and to 
discredit others. This is inevitable, and is only the prop- 
er and legitimate use of economic knowledge. But this 
notwithstanding, the science is neutral, as between social 
schemes, in this important sense. It pronounces no judg- 
ment on the worthiness or desirableness of the ends 
aimed at in such systems. It tells us what their effects 
will be as regards a specific class of facts, thus con- 
tributing data toward tlie formation of a sound opinion 
respecting them. But here its function ends. The data 
thus furnished may indeed go far to determine our judg- 
ment, but they do not necessarily, and should not in 
practice always, do so. For there are few practical prob- 
lems which do not present other aspects than the purely 
economical — political, moral, educational, artistic aspects 
— and these may involve consequences so weighty as to 
turn the scale against purely economic solutions. On 
the relative importance of such conflicting considera- 
tions Political Economy offers no opinion, pronounces 
no judgment — thus, as I said, standing neutral between 
competing social schemes ; neutral, as the science of 
Mechanics stands neutral between competing plans of 
railway construction, in which expense, for instance, as 
well as mechanical efficiency, is to be considered ; neu- 
tral, as Cliemistry stands neutral between competing 
plans of sanitary improvement; as Physiology stands 
neutral between opposing ' systems of medicine. It 
supplies the means, or, more correctly, a portion of 



38 LOGIC OF POLITICAL ECONOMY. 

tlie means for estimating all ; it refuses to identify 
itself with any. 

"Now I desire to call particular attention to this char- 
acteristic of economic science, because I do not think it 
is at all generally appreciated, and because some serious 
and indeed lamentable consequences have arisen from 
overlooking it. For example, it is sometimes supposed 
that because Political Economy comprises in its exposi- 
tions tlieories of wages, profits, and rent, the science is 
therefore committed to the approval of our present mode 
of industrial life, under which three distinct classes — la- 
borers, capitalists, and landlords — receive remuneration in 
those forms. Under this impression, some social reform- 
ers, whose ideal of industrial life involves a modification 
of our existing system, have thought themselves called 
upon to denounce and deride economic science, as for- 
sooth seeking to stereotype the existing forms of indus- 
trial life, and of course therefore opposed to their views. 
But this is a complete mistake. Economic science has 
no more connection with our present industrial system 
than the science of mechanics has with our present system 
of railways. Our existing railway lines have been laid 
down according to the best extant mechanical knowl- 
edge; but w^e do not think it necessary on this account, 
as a preliminary to improving our railways, to denounce 
mechanical science. If wages, profits, and rent find a 
place in economic theories, this is simply because these 
are the forms which the distribution of wealth assumes 
as society is now constituted. They are phenomena which 
need to be explained. But it comes equally within the 
province of the economist to exhibit the working of any 
proposed modification of this system, and to set forth the 



INTRODUCTORY. 39 

operation of the laws of production and distribution 
under such new conditions. 

" And, in connection with tliis point, I may make this 
remark : that, so far is it from being true, as some would 
seem to suppose, that economic science has done its work, 
and tluis become obsolete for practical purposes, an ob- 
ject of mere historical curiosity, it belongs, on the con- 
trary, to a class of sciences wliose work can never be 
completed, never at least so long as human beings con- 
tinue to progress; for the most important portion of 
the data from which it reasons is human character and 
human institutions, and every thing consequently which 
affects that character or those institutions must create 
new problems for economic science. Unlike the phys- 
icist, who deals with phenomena incapable of develop- 
ment, always essentially the same, the main facts of the 
economist's study — man as an industrial being, man as 
organized in society — are ever undergoing change. T]ie 
economic conditions of patriarchal life, of Greek or Ro- 
man life, of feudal life, are not the economic conditions 
of modern commercial life ; and had Political Economy 
been cultivated in those primitive, ancient, «r mediaeval 
times, while it would doubtless have contained some ex- 
positions which we do not now find in it, it must also have 
wanted many which it now contains. One has only to 
turn to the discussions on currency and credit which have 
accompanied the great development of England's com- 
merce during the last half -century to see how the changing 
needs of an advancing society evoke new problems for 
the economist, and call forth new growths of economic 
doctrine. At this moment one may see that such an oc- 
casion is imminent. Since the economic doctrines now 



40 LOGIC OF POLITICAL ECONOMY. 

holding tlieir place in English text-books were thought 
out, a new mode of industrial organization has established 
itself in Great Britain and other countries. Co-operation 
is now a reality, and, if the signs are not all deceptive, bids 
fair to transform much of England's industry. IS'ow the 
characteristic feature of co-operation, looked at from the 
economic point of view, is that it combines in the same per- 
son the two capacities of laborer and capitalist ; whereas 
our present theories of industrial remuneration presuppose 
a division of those capacities between distinct persons. 
Obviously, our existing theories must fail to elucidate a 
state of things different from that contemplated in their 
elaboration. AVe have thus need of a new exposition of 
the law of industrial remuneration — an exposition suited 
to a state of things in which the gains of producers, in- 
stead of taking the form of wages, profits, and rent, are 
realized in a single composite sum. I give this as an 
example of the new developments of economic theory 
which the progress of society will constantly call for. 
Of course it is an open question whether this is the di- 
rection in which industrial society is moving; and there 
are those, I know, who hold that it is not toward co-op- 
eration, but rather toward ' captains of industry ' and 
organization of workmen on the military plan, that the 
current is setting. It may be so, and in this case the 
economic problem of the future will not be that which 
I have suggested above ; nevertheless, an economic prob- 
lem there still will be. If society were organized to- 
morrow on the principles of M. Comte, so long as phys- 
ical and human nature remain what they are, the phe- 
nomena of wealth would exhibit constant relations, would 
still be governed by natural laws; and those relations, 



INTRODUCTORY. 4]^ 

those laws, it would still be important to know. The 
function of the economist would be as needful as ever. 

" A far more serious consequence, however, of ig- 
noring the neutral attitude of this study in relation to 
questions of practical reform is the effect it has had in 
alienating from it the minds of tlie workina; classes. In- 
stead of appearing in the neutral guise of an expositor of 
truths, the contributor of certain data toward the solu- 
tion of social problems — data which of themselves com- 
mit no man to any course, and of which the practical co- 
gency can only be determined after all the other data 
implicated in the problem are known — instead of pre- 
senting itself as Chemistry, Phj'siology, Mechanics present 
themselves, Political Economy too often makes its ap- 
pearance, especially in its approaches to the working 
classes, in the guise of a dogmatic code of cut-and-dried 
rules, a system promulgating decrees, ' sanctioning ' one 
social arrangement, 'condemning' another, requiring 
from men, not consideration, but obedience. Xow when 
we take into account the sort of decrees which are ordi- 
narily given to the world in the name of Political Econ- 
omy — decrees whicli I think I may say in the main 
amount to a handsome ratification of the existing form 
of society as approximately perfect — I think we shall 
be able to understand the repugnance, and even violent 
opposition, manifested toward it by people who have 
their own reasons for not cherishing that unbounded ad- 
miration for our present industrial arrangements which 
is felt by some popular expositors of so-called economic 
laws. When a working man is told tliat Political Econ- 
omy 'condemns' strikes, liesitates about co-operation, 
looks askance at proposals for limiting the hours of laboi', 



42 LOGIC OF POLITICAL ECONOMY. 

but 'approves' tlie accumulation of capital, and 'sanc- 
tions ' the market rate of wages, it seems not an unnat- 
nral response that ' since Political Economy is against 
the working man, it behooves the working man to be 
against Political Economy.' It seems not unnatural that 
this new code should come to be regarded with suspicion, 
as a sj^stem possibly contrived in the interest of employ- 
ers, which it is the workmen's wisdom simply to repudiate 
and disown. Economic science is thus placed in an es- 
sentially false position, and the section of the community 
which is most vitally interested in taking to heart its 
truths is effectually -prevented from even giving them a 
hearing. I think it, therefore, a matter not merely of 
theoretic but of the utmost practical importance, that 
the strictly scientific character of this study should be 
insisted upon. It is only when so presented that its true 
position in relation to practical reforms, and its really 
benevolent bearing toward all sorts and conditions of 
men, will be understood, and tliat we can hope to over- 
come those deep-seated but perfectly natural prejudices 
with which the most numerous class in the community 
unfortunately regard it." ' 

^ "Essays in Political Economy, Tiieoretical and Applied," pp. 252- 
261. 



LECTURE 11. 

OF THE MEITTAL AND PHYSICAL PREMISES OF PO- 
LITICAL ECONOMY, AND OF THE LOGICAL 
CHARACTER OF THE DOCTRINES 
THENCE DEDUCED. 

§ 1. In my last lecture I called attention to the con- 
ception of Political Economy formed by the leading 
writers on the subject in England, and in particular I 
took occasion to point out the significance of the words 
which describe it as the " Science of Wealth." "We have 
now reached a point at which it may be well to attempt 
some more precise determination of its character and 
scope, and, with a view to "this, to consider the position 
occupied by economic speculation in. relation to the 
two great departments of existence — matter and mind. 
With regard to this aspect of the case, the following 
theory has been advanced by high authorities: 

" In all tlie intercourse of man witli nature, M'hether we 
consider him as acting upon it, or as receiving impressions 
from it, the effect or phenomenon depends upon causes of 
two kinds : the j^roperties of the object acting, and those 
of the object acted upon. Every tiling which can possibly 
liappen, in Avhich man and external tilings are jointly con- 
cerned, results from tlie joint operation of a law or laws 
of matter and a law or laws of the human mind. Thus the 
production of corn by human labor is tlie result of a law 
of mind and many laws of matter. The laws of matter 



44 THE CHARACTER OF 

are tliose pvopertics of the soil and of vegetaLle life wliicli 
cause the seed to germinate in the ground, and those projD- 
erties of the human body which render food necessary 
to its support. The law of mind is that man desires to 
possess subsistence, and consequently wills the necessary 
means of procuring it. Laws of mind and laws of matter 
are so dissimilar in their nature that it would be contrary 
to all principles of rational arrangement to mix them up 
as part of the same study. In all scientific methods, there- 
fore, they are placed apart. Any compound efi:ect or phe- 
nomenon which depends both on the properties of matter 
and on those of mind may thus become the subject of two 
completely distinct sciences, or branches of science : one 
treating of the phenomenon in so far as it depends upon 
the laws of matter only ; the other treating of it in so far 
as it depends upon the laws of mind. 

"The physical sciences are those which treat of the laws 
of matter, and of all complex phenomena, in so far as de- 
l^endent upon the laws of matter. The mental or moral 
sciences are those which treat of the laws of mind, and of 
all complex phenomena, in so far as dependent upon the 
laws of mind. Most of the moral sciences presuppose 
physical science ; but few of the physical sciences presup- 
pose moral science. The reason is obvious. There are 
many phenomena (an earthquake, for example, or the mo- 
tions of the planets) which depend upon the laws of matter 
exclusively, and have nothing whatever to do with the 
laws of mind. Many of the physical sciences may be 
treated of without any reference to mind, and as if the 
mind existed as a recipient of knowledge only, not as a 
cause producing effects. But there are no phenomena 
Avhich depend exclusively upon the laws of mind ; even the 
phenomena of the mind itself being partially dependent 
upon the physiological laws of the body. All the mental 
sciences, therefore, not excepting the pure science of mind, 
must take account of a great variety of physical truths ; 
and (as physical science is commonly and very proper- 
ly studied first) may be said to presuppose them, taking 



POLITICAL ECONOMY. 45 

up the complex phenomena where physical science leaves 
them. 

"Now this, it will be found, is a precise statement of the 
relation in whicli Political Economy stands to the various 
sciences \vlnch are tributary to the arts of production. 

" The laws of the production of tlie objects which con- 
stitute w^ealth are the subject-matter both of Political 
Economy and of almost all the physical sciences. Such, 
however, of those laws as are purely laws of matter belong 
to physical science, and that exclusively. Such of them as 
are laws of tlie human mind, and no others, belong to Po- 
litical Economy, Avhich finally sums up the result of botli 
combined." * 

The view here set fortli has been accepted by another 
liigli authority, Mr. Senior, who, in an article in the Ed- 
inburgh Review (Oct., ISttS), comments as follows upon 
the passage just quoted : 

" The justice of these views, we think, is obvious; and, 
though they are now for the first time formally stated, an 
indistinct perception of them must be general, since they 
are generally acted on. The Political Economist ^loes not 
attempt to state the mechanical and chemical laws which 
enable the steam-engine to perform its miracles. He passes 
tliem by as laws of matter; but he explains as fully as his 
knowledge will allow the motives M'hich induce the mech- 
anist to erect the steam-engine and the laborer to work 
it : and these are laws of mind. He leaves to the geolo- 
gist to explain tlie laws of matter which occasion the for- 
mation of coal ; to the chemist, to distinguish its compo- 
nent elements; to the engineer, to state the means by Avhich 
it is extracted; and to the teachers of many hundred dif- 
ferent arts to point out the uses to which it may be ap- 
plied. What he reserves to himself is to explain the laws 

^ " Essaj'S on some Unsettleii Questions in Political Economy," liy J. 
a Mill, pp. 130-132. 



46 THE CHARACTER OF 

of mind under wliicli the owner of tbe soil allows his past- 
ures to be laid waste, and the minerals which they cover 
to be abstracted ; under which the capitalist employs in 
sinking shafts and piercing galleries funds which might 
be devoted to his own immediate enjoyment ; under which 
the miner encounters the toils and the dangers of his haz- 
ardous and laborious occupation ; and the laws, also laws 
of mind, which decide in what proportions the produce or 
the value of the produce is divided between the three 
classes by whose concurrence it has been obtained. When 
lie uses as his premises, as he often must do, facts supplied 
by physical science, he does not attempt to account for 
them." ^ 

The concluding sentence in tlie passage taken from 
Mr. Mill's Essay, in which he says that Political Econo- 
my " finally sums np the result of both [laws of mind 
and of matter] combined," seems to me to describe cor- 
rectly the function of the science, but to be inconsistent 
with the tenor of the remarks which precede it, as it is 
plainly inconsistent wdth Mr. Senior's interpretation of 
the passage. Excluding that sentence, the effect of the ex- 
position is that Political Economy belongs to the group 
of sciences " which treats of the laws of mind, and of 
all complex phenomena, in so far as dependent upon the 
laws of mind," and is, therefore, properly described as a 
"mental" or "moral" science; wdiile its relation to the 
world of matter being of a different and altogether less 
intimate character, it is properly kept apart from the 
physical group. The facts and laws of material nature 
it takes for granted ; but the facts and laws of mind, so 
far as these are involved in the production and distribu- 
tion of wealth, constitute its jDroper province, furnishing 
the phenomena of which it " treats" and which it " ex- 



POLITICAL ECONOMY. 47 

plains." To this effect, it seems to me, is the view fair- 
ly dedncible from the passages I have quoted ; and, so 
far as I know, the doctrine, as I have stated it, has been 
generally acquiesced in by later writers. Inow from this 
view of the character of Political Economy I venture to 
dissent. It appears to me that the laws and phenomena 
of wealth which it belongs to this science to explain de- 
pend equally on physical and on mental laws ; that Po- 
litical Economy stands in precisely the same relation to 
physical and to mental nature ; and that, if it is to be 
ranked in either of these departments of speculation, it 
is as well entitled to be placed in the one as in the other. 
The expressions "phj'sical" and "mental," as applied 
to science, have generally been employed to designate 
those branches of knowledge of which physical and 
mental phenomena respectively form the subject-matter. 
Thus Chemistry is considered as a physical science be- 
cause the subject-matter on which chemical inquiry is 
exercised, viz., material elements and combinations, is 
physical. Psychology, on the other hand, is a' mental 
science ; the subject-matter of it being mental states and 
feelings. And as the office of the chemist consists in 
observing and analyzing material objects with .a view to 
discovering the laws of their elementary constitution, 
so that of the psychologist consists in endeavoring, by 
means of reflection on what passes in his own, or appears 
to pass in the minds of others, to ascertain the laws by 
which the phenomena of our mental constitution succeed 
and produce each other. If tliis be a correct statement 
of the principle on which tlie designations "mental" and 
"' physical " are applied to the sciences, it seems to fol- 
low that PoliticalEconomy does not find a place under 



48 THE CHARACTER OF 

either category, l^eitlier mental nor physical nature 
forms the subject-matter of the investigations of the po- 
litical economist, lie considers, it is true, physical phe- 
nomena, as lie also considers mental phenomena, bnt in 
neither case as phenomena which it belongs to his science 
to explain. The subject-matter of that science is wealth ; 
and though wealth consists in material objects, it is not 
wealtli in virtue of those objects being material, but in 
virtue of their possessing value — that is to say, in virtue 
of their possessing a quality attributed to them by the 
mind. The subject-matter of Political Economy is thus 
neither purely physical nor purely mental, but possesses 
a complex character, equally derived from both depart- 
ments of nature, and the laws of which are neither men- 
tal nor physical laws, though they are dependent, and, 
as I maintain, dependent equally on the laws of matter 
and on those of mind. 

Let us consider, for example, the causes which deter- 
mine the rate of wages. This, it will be admitted on all 
hands, is an economic problem. It is evident that the 
objects which the laborer receives are material objects, 
but those material objects are invested by the mind with 
a peculiar attribute in consequence of which they are 
considered as possessing value ; and it is in their com- 
plex character, as physical objects invested with the at- 
tribute of value, that the political economist considers 
them. The subject-matter, therefore, of the wages-prob- 
lem possesses qualities derived alike from physical and 
from mental nature; consequently, if it is to be denomi- 
nated from the nature of its subject-matter, it is equally 
entitled or disentitled to the character of a physical or 
mental problem. 



POLITICAL ECONOMY. 41) 

Bat it is said that Political Economy considers the 
problem- no further than as it depends on the action of 
the human mind. The food and clothing which the la- 
borer consumes have, no donbt, pliysical properties, as 
the laborer himself has a physical as well as a mental 
nature ; but with the phj^sical properties, we arc told, 
tlie political economist has no concern : he considers 
those objects so far forth only as they possess value, and 
value is a purely mental conception. But is this true? 
Does the political economist — does Mr. Senior, e.g., in 
his purely scientific treatment of this question — entirely 
put out of consideration the physical properties of the 
commodities which the laborer consumes, or the physio- 
logical conditions on which the increase of the laboring 
population depends ? What is the solution of the wages- 
problem ? Wages, it will be said, depend on demand and 
supply ; or, more explicitly, on the relation between the 
amount of capital applied to the payment of wages and 
the number of laborers seehing employment. But the 
amount of capital employed in the payment of ^^'agcs 
depends, among other causes, on the productiveness of 
industry in raising the commodities of the laborer's con- 
sumption — a circumstance which is equally dependent 
on the laws of physical nature and on the mental quali- 
ties which the workman brings to his task. The number 
of laborers seeking employment, again, depends, among 
other causes, on the laws of population; while these are 
determined as much by the physiological laws of the 
body as the psychological laws of the mind, the polit- 
ical economist taking equal cognizatice of both. 

It thus appears that as the subject-matter of Political 
Economy, viz., wealth, possesses qualities derived equally 

C 



50 THE CHARACTER OF 

from tliG world of matter and from that of mind, so its 
premises are equally drawn from both these departments 
of nature. The latter point, indeed, is admitted by the 
authorities to whom I have referred, who, nevertheless, 
by what I must deem a strange oversight, represent the 
science as investigating the laws of wealth no further 
than as they depend on the laws of the human mind. 

But perhaps this point will be made more clear — the 
equal dependence, namely, of the science of Political 
Economy on the laws of the phj^sical world and on those 
of the human mind — if we consider that a change in the 
character of the former laws will equally affect its con- 
clusions with a change in that of the latter. The phys- 
ical qualities of the soil, e. g., under the present constitu- 
tion of nature, are such that, after a certain quantum of 
cultivation has been applied to a limited area, a further 
application is not attended with a proportionate return. 
The proof of this is that, instead of confining cultiva- 
tion to the best soils, and forcing them to yield the whole 
amount of food that may be required, it is found profit- 
able to resort to soils of inferior quality.* 

' This doctrine has been denied, and some curious arguments have been 
advanced in refutation of it. The topic most insisted on by those who 
controvert it is the superior productiveness of agricultural industry in tlie 
United Kingdom at present, as compared with that which prevailed in 
former periods, notwithstanding the greater amount of capital now em- 
ployed in agriculture. This argument would be good for something if all 
the other conditions of the problem were the same ; but it is certain that 
they are not the same, and that they differ precisely in the point thai is 
of importance— the superior skill with which capital and industry are at 
present applied. No economist that I am aware of has ever said tliat a 
small and unskillful application of capital to land would necessarily be at- 
tended -with greater proportional returns than a larger outlay more skill- 
fully applied ; and it is to this assertion only that the argument in ques- 
tion applies. - 



POLITICAL ECONOMY. 51 

This pli^'sical fa,ct, as every political economist knows, 
and as shall be explained on a f ntnre occasion, leads, 
through the play of human desires in the pursuit of 
wealth, to the phenomenon of rent, to tlie fall of profits 
as communities advance, aTid to a retardation in the ad- 

Bnt it is important to remark that the attempt to meet the doctrine in 
q.iestion hy statistical data imjolies (as will hereafter more clearly appear) 
a total misconception, both of the fact which is asserted and of tlie kind 
of proof wliich an economic doctrine requires. The doctrine contains, not 
a historic generalization to be tested by documentary evidence, but a state- 
ment as to an existing physical fiict, wliich, if seriously questioned, can only 
be conclusively determined by actual experiment upon the existing soil. 
If any one denies the fact, it is open to him to refute it by making the ex- 
periment. Let him show that he can obtain from a limited area of soil 
any required quantity of produce by simply increasing the outlay — that is 
to say, that hy quadrupling or decupling the outlay he can obtain a quad- 
ruple or decuple return. If it be asked why those wlio maintain the af- 
firmative of the doctrine do not establish their view b}' actual experiment, 
the answer is that the experiment is performed for them by every prac- 
tical farmer ; and that the fart of the diminishing productiveness of the 
soil is proved by their conduct in preferring to resort to inferior soils rath- 
er than force unprofitably soils of better quality. 

Mr. Carey, the American economist, has endeavored to meet this rea- 
soning by urging that the conduct of farmers in resorting to inferior soils 
after the better qualities have been all taken into cultivation, no more consti- 
tutes a proof tliat industry on the superior soils has become less produc- 
tive than the conduct of a cotton-spinner in building a second factory 
when his first is full is a proof that manufiicturing industry tends to become 
less productive as manufacturing cajiital and labor increase. This is, in 
other words, to say that the reason farmers do not increase tlieir outlay 
on the soils of superior quality is, not because it would be unprofitable to 
do so, but for the same reason which limits the amount of cajiital and the 
number of hands employed in a cotton-mill, namely, that, the necessary 
conditions of space being taken into account, it would he im/iossible to do 
so. No one who holds the received theory of rent will hesitate to stake 
the doctrine upon the issue. When an_y sane farmer in the United King- 
dom, or in any other quarter of the civilized world, will give the same an- 
swer to the question, "Why he does not manure more higlily, or drain 
more deeply, or plow more frequently, a given field ?" wliich Mr. Carey 
gives, viz., "want of room," the disciples of Ricardo will be prepared to 
abandon their master ; but //// this specimen of bucolic exegesis is pro- 
duced they will probably retain their present views. 



52 THE CHARACTER OF 

vance of population. If the fact were otherwise— if tlie 
physical properties of the soil were such as to admit of 
an indefinite increase of produce in undiminished pro- 
portion to the outlay by simply increasing the outlay — 
if, e. g., it were found that by doubling the quantity of 
manure upon a given acre and by plowing it twice as 
often, a farmer could obtain a double produce, and by a 
quadruple outlay a quadruple produce, and so on ad in- 
finitum; if this were so, the science of Political Econ- 
omy, as it at present exists, would be as completely 
revolutionized as if human nature itself were altered — 
as if benevolence, for example, were so strengthened at 
the expense of self-love that human beings should refuse 
to avail themselves, at the expense of their neighbors, of 
tliose special advantages with which nature or fortune 
may happen to endow them ; under such a change in the 
physical qualities of the soil rent would dieaj-ipear, profits 
would have no tendency permanently to fall, and pop- 
ulation in the oldest countries might advance as rapidly 
as in the newest colonies. 

I am, tlierefore, disposed to regard Political Economy 
as belonging neither to the department of physical nor 
to that of mental inquiry, but as occupying an interme- 
diate position, and as referable to the class of studies 
which includes historical, political, and, in general, social 
iiivestigations. The class appears to me to be a class siii 
generis, having for its subject-matter the complex phe- 
nomena presented by the concurrence of physical, phys- 
iological, and mental laws, and for its function the trac- 
ing of such phenomena to their physical, physiological, 
and mental causes. 

Thus, to take an example from Political Economy, rent 



POLITICAL ECONOMY. 53 

is a complex phenomenon, arising (as lias been already 
intimated) from the play of luiman interests wlien brought 
into contact with the actual physical conditions of the 
soil in relation to the pliysiological character of vegetable 
productions. If these physical conditions were different, 
if capital and labor could be applied to a limited por- 
tion of the soil indefinitely Vvith midiminished return, a 
small portion only of the best land in the country would 
be cultivated, and no farmer would consent to pay rent ; 
on the other hand, if the principle of self-interest were 
absent, no landlord would exact it. Both conditions are 
indispensable, and equally indispensable, to the existence 
of rent : they are the premises from which the theory 
is deduced. It is for the political economist to prove, 
first, that the premises are true in fact ; and, secondly, 
that they account for the phenomenon ; but when this is 
done, his business is ended. lie does not attempt to 
explain the physical laws on which tlie qualities of the 
soil depend ; and no more does he undertake to analyze 
the nature of those feelings of self-interest in the minds 
of the landlord and tenant which regulate the terms of 
the bargain. lie regards them both as facts, not to be 
analyzed and explained, but to be ascertained and taken 
account of ;. not as the subject-matter, but as the basis of 
his reasonings. If farther information be desired, re- 
course must be had to other sciences : the physical fact 
lie hands over to the chemist or the physiologist; the 
mental to the psychological or the ethical scholar. 

In the considerations just adduced, we may perceive 
what the proper limits are of economic inquiiy — at what 
point the economist, in tracing the phenomena of wealth 
to their causes and laws, may properly stop and consider 



54 THE CHARACTER OF 

his task as completed, his problem as solved. It is pre- 
cisely at that point at which in the course of his reason- 
ings he finds himself in contact with some phenomenon 
not economic, with some ph^'sical or mental fact, some 
political or social institution. So soon as he has traced 
the phenomena of wealth to causes of this order, he has 
reached the proper goal of his researches; and such 
causes, therefore, are properly regarded as " ultimate " 
in relation to economic science. E^ot that they may not 
deserve and admit of further analysis and explanation, 
but that this analysis and explanation is not the business 
of the economist — is not the specific problem which he 
undertakes to solve.' 

The position of Political Economy, as just described, 
may be illustrated by that of Geology in relation to the 
sciences of Mechanics, Chemistry, and Physiology. The 
complex phenomena presented by the constitution of the 
earth's crust form the subject-matter of the science of 
the geologist ; they are the complex result of mechanical, 
chemical, and physiological laws, and the business of the 
geologist is to trace them to these causes; but having 
done this, his labors as a geologist are at an end : the 
further investigation of the problem belongs not to Ge- 
ology, but to Mechanics, Chemistry, and Physiology. 

§ 2. The premises, or ultimate facts, of Political Econ- 
omy being thus drawn alike from the world of matter 
and from that of mind, it remains that I should indicate 
the character of those facts, physical and mental, from 
which the conclusions of the science are derived ; in 

^ Appendix B. 



POLITICAL ECONOMY. 



b'O 



other words, that I should show in what manner the facts 
which are pertinent to economic investigations are to be 
distiuguislied from those which are not. The answer to 
this question must in general be determined by consider- 
ing what the science proposes to accomplish. This, as 
you are aware, is the discovery of the laws of the pro- 
duction and distribution of wealth. The facts, therefore, 
which constitute the premises of Political Economy are 
those which influence the production and distribution of 
wealth ; and in order that the science be absolutely per- 
fect, so that an economist miglit predict the course of 
economic phenomena with the same accuracy and cer- 
tainty Avith which an astronomer predicts the course of 
celestial phenomena, it would be necessary that these 
premises should include every fact, mental and pliysical, 
which influences the phenomena of wealth. 

It does not, however, seem possible that this degree of 
perfection shonld ever be attained. In Political Econ- 
omy, as in all those branches of inquiry which include 
among their premises at once the moral and physical 
nature of man, the facts to be taken account of are so 
numerous, their character so yarious, and the laws of 
their sequence so obscure, that it would seem scarcely 
possible to ascertain them all, much less to assign to each 
its exact value. And even if this were possible, the task 
of tracing these principles to their consequences, allowing 
to each its due signiticance, and no more than its due 
significance, would present a problem so complex and 
difiicult as to defy the powers of the most accomplished 
reasoners. 

But although this is so, and although, therefore, neither 
Political Economy nor any of the class of inquiries to 



56 THE CHARACTER OF 

wliich it belongs may ever be expected to reach tliat 
perfection "vvhich has been attained in some of the more 
advanced physical sciences, yet this does not forbid ns to 
hope that, by following in our economic investigations 
the same course which has been pursued with such suc- 
cess in physical science, we may attain, if not to absolute 
scientific perfection, at least to the discovery of solid and 
valuable results. 

The desires, passions, and propensities which influence 
mankind in the pursuit of wealth are, as I have inti- 
mated, almost infinite ; yet among these there are some 
principles of so marked and paramount a character as 
both to admit of being ascertained, and, when ascertained, 
to afford the data for determining the most important 
laws of the production and distribution of wealth, in so 
far as these laws are affected by mental causes. To pos- 
sess himself of these is the first business of the political 
economist ; he has then to take account of some leading 
physiological facts connected with human nature; and, 
lastly, to ascertain the principal physical characteristics 
of those natural agents of production on w^hich human 
industry is exercised. Thus he will consider, as being 
included among the paramount mental principles to 
which I have alluded, the general desire for physical 
well-being, and for wealth as the means of obtaining it ; 
the intellectual power of judging of the efficacy of means 
to an end, along with the inclination to reach our ends 
by the easiest and shortest means — mental facts from 
which results the desire to obtain wealth at the least pos- 
sible sacrifice ; he will further duly weigh those propen- 
sities which, in conjunction with the physiological con- 
ditions of the human frame, determine the laws of popu- 



POLITICAL EC 0X0 MY. 57 

lation ; and, lastly, he will take into account the physical 
qualities of the soil, and of those other natural agents on 
which the labor and ingenuity of man are employed. 
These facts, whether mental or physical, he w^ll con- 
sider, as I have already stated, not with a view to explain 
them, but as the data of his reasoning, as leading causes 
aifecting the production and distribution of wealth. 

But it must not be thought that, when these cardinal 
facts have been ascertained and their consequences duly 
developed, the labors of the political economist are at an 
end, even supposing that his treatment of them has been 
exhaustive and his reasoning without a flaw. Though 
the conclusions thus arrived at will, in the main, corre- 
spond with the actual course of events, yet great and 
glaring discrepancies will frequently occur. The data 
on which his speculations have been based, include, in- 
deed, the grand and leading causes which regulate the 
production and distribution of wealth, but they do not 
include all the causes. Many subordinate influences 
(subordinate, I mean, in relation to the ends of Political 
Economy) will intervene to disturb, and occasionally to 
reverse, the operation of the more powerful principles, 
and thus to modify the resulting phenomena. The next 
step, therefore, in his investigations will be to endeavor 
as far as possible to ascertain the character of those sub- 
ordinate causes, whether physical or mental, political or 
social, which influence human conduct in the pursuit of 
wealth ; and these, when he has found thera and is en- 
abled to appreciate them with sufHcient accuracy, he will 
incorporate among the premises of the science, as data 
to be taken account of in his future speculations. 

Thus the political and social institutions of a coun- 
C2 



58 THE CHARACTER OF 

try, and in particular tlie laws affecting tlie tenure of 
land, will be included among sucli subordinate agen- 
cies ; and it will be for the political economist to show 
in what way causes of this kind modify tlie operation 
of more fundamental principles in relation to the phe- 
nomena which it belongs to his science to investigate. 

Again, any great discovery in the arts of production, 
such, e. g., as the steam-engine, will be a new fact for 
the consideration of the political economist ; it will be 
for him to consider its effect on the productiveness of 
industry or the distribution of its products ; how far 
and in what directions it is calculated to affect wages, 
profits, and rent, and to modify those conclusions to 
which he may have been led by reasoning from the 
state of productive industry previous to its introduc- 
tion. It will be like the discovery to an astronomer 
of a new planet, the attraction of whicli, operating on 
all the heavenly bodies within the sphere of its influ- 
ence, will cause them more or less to deviate from the 
path which had been previously calculated for them. 
It is a new force, which, in speculating on the tenden- 
cies of economic phenomena, the political economist will 
include as a new datum among his premises. 

In the same way, also, those motives and principles 
of action which may be developed in the progress of 
society — so far as they may be found to affect the phe- 
nomena of wealth — will also be taken account of by 
the political economist. He will consider, e. g., the in-* 
fl.uence of custom in modifying human conduct in the 
pursuit of wealth ; he will consider how, as civilization 
advances, the estimation of the future in relation to 
the present is enhanced, and the desire for immediate 



POLITICAL ECONOMY. ■»• 59 

enjoyment is controlled by tlie increasing efficacy of 
prudential restraint ; Le will also observe how ideas of 
decency, comfort, and luxury are developed as society 
progresses, modifying the natural force of the princi- 
ples of population, influencing the mode of expendi- 
ture of different classes, and affecting thereby the dis- 
tribution of industrial products. 

The question is sometimes asked — How far should 
moral and religious considerations be admitted as com- 
ing within the purview of Political Economy?' and 
the doctrine now under exposition enables us to supply 
the answer. Moral and religious considerations are to 
be taken account of by the economist precisely in so 
far as they are found, in fact, to affect the conduct of 
men in the pursuit of wealth. In so far as tliey oper- 
ate in this way, sucli considerations are as pertinent to 
liis inquiries as the desire for physical well-being, or 
the propensity in human beings to reproduce tlieir 
kind ; and tliey are only less important as premises of 
his science than the latter principles, because, they are 
far less influential with regard to tlie phenomena which 
constitute the subject-matter of his inquiries. 

As I have already remarked, it is scarcely possible 
that all these circumstances shoukl be ascertained or 
accurately appreciated ; but it seems quite possible that 
some of the most important of them may, Avith suffi- 
cient accuracy at least to be made available as data for 
subsequent deductions, and be entitled to a place among 
the premises of the science. And in proportion as this 

' To be distinguished from another question with which it is com- 
monly confotmded, viz., How far should economic considerations be made 
subordinate to considerations of morality in the art of government ? 



QQ . THE CHARACTER OF 

is done, in proportion to the completeness of its prem- 
ises, and to the skill with which they are reasoned npon, 
will the science of Political Economy approximate to- 
ward that perfection which has been attained in other 
branches of knowledge ; in the same degree will its con- 
clusions correspond with actual events, and its doctrines 
become safe and trustworthy guides to the practical 
statesman and the philanthropist. 

§ 3. Having: now considered the character and limits 
of Political Economy, I shall conclude this lecture by 
adverting briefly to a point — not, as might at first siglit 
seem, of purely theoretic importance — on which some 
high authorities are at variance. I allude to the ques- 
tion whether Political Economy be a positive or a hy- 
pothetical science. 

It does not appear that the meaning of the terms 
" positive " and " hypothetical," as they have been used 
in this controversy, has been precisely fixed, and I am 
disposed to think tliat the difference of opinion which 
prevails may, in a great measure, be resolved into an 
ambiguity of language. Let us consider, then, what is 
to be understood by the terms "positive" and "hypo- 
thetical " when applied to a science. 

In the first place, we may describe a science as " pos- 
itive " or " hypothetical " with reference to the character 
of its premises. It is in this sense that we speak of 
Mathematics as a hypothetical science, its premises being 
arbitrary conceptions framed by the mind, which have 
nothing corresponding to them in tlie world of real ex- 
istence ; and it is in this sense that we distinguish it 
from the positive physical sciences, the premises of 



POLITICAL ECONOMY. 61 

which are Laid in the existing facts of nature. But 
" positive " and " hypothetical " may also be used with 
reference to the conclusions of a science ; and in this 
sense all the pliysical sciences whicli have advanced so 
far as to admit of deductive reasoning must be consid- 
ered liypothetical, in contradistinction to those less ad- 
vanced sciences which, being still in the purely induc- 
tive stage, express in their conclusions merely observed 
and generalized facts. The conclusions, e. g., of a mech- 
anician or of an astronomer, though correctly deduced 
from premises representing concrete realities, may have 
nothing accurately to correspond with them in nature. 
The mechanician may have overlooked the disturbing 
influence of friction. The astronomer may have been 
ignorant of the existence of some planet, the attractive 
force of wliich may be an essential element in the so- 
lution of his problem. The conclusions of each, there- 
fore, when applied to facts, can ovAy be said to be true 
in the absence of dlsHirhing causes ; which is, in other 
words, to say that they are true on the hypothesis that 
the premises include all the causes affecting the result. 
The correspondence of such deductions with facts may, 
according to the circumstances of each case, possess any 
degree of probabilitj'^, from a mere presumption in favor 
of a particular result to a probability scarcely distin- 
guishable from absolute certainty. This will depend 
on the degree of perfection which the science has at- 
tained ; but, whatever be tliat degree of perfection, 
from the limited nature of man's faculties he can never 
be sure that he is in possession of all the premises af- 
fecting the result, and therefore can never be certain 
that his conclusions represent positive realities. Speak- 



Q2 THE CHARACTER OF 

ing, therefore, with, reference to the conclusions of those 
physical sciences in which deductive reasoning is em- 
ployed, such sciences must be regarded as hypothetical. 

On the other hand, in those sciences which have not 
advanced far enough to admit of deductive reasoning, 
sucli laws as they have arrived at, being mere general- 
ized statements of observed phenomena, represent not 
hypothetical but positive trutli. Such are the general- 
ized facts in geology and in many of the natural sci- 
ences. 

Now Political Economy seems in tliis respect plainly 
to belong to the same class of sciences with Mechanics, 
Astronomy, Optics, Chemistry, Electricity, and, in gen- 
eral, all those physical sciences which have reached the 
deductive stage. Its premises are not arbitrary figments 
of the mind, formed without reference to concrete ex- 
istences, like those of Mathematics ; nor are its conclu- 
sions mere generalized statements of observed facts, 
lilvc those of the purely inductive natural sciences. But, 
like Mechanics or Astronomy, its premises represent pos- 
itive facts ; while its conclusions, like the conclusions 
of these sciences, inay or may not correspond to the 
realities of external nature, and therefore must be con- 
sidered as representing only hypothetical truth. 

It is positively true, e. g., to assert that men desire 
wealth, that they seek, according to their lights, the eas- 
iest and shortest means by wdiich to attain their ends, 
and that consequently they desire to obtain wealth with 
the least exertion of labor possible ; and it is a logical 
deduction from this principle that, where perfect liberty 
of action is permitted, laborers will seek those employ- 
ments, and capitalists those modes of investing their 



POLITICAL ECONOMY. (53 

capital, in wliicli, ceteris jparibus^ wages and profits are 
highest. It is further a necessary consequence of this 
principle that, were it universally and constantly acted 
upon, the rate of profit and the rate of wages over the 
whole world would not indeed be the same, but would 
stand, or tend to stand, in the same relation to the act- 
ual sacrifices undergone by the recipients of these two 
kinds of remnneration. Ye'c so far is this from being 
the case that there are scarcely two countries in which 
wages and profits (meaning thereby the average rate of 
each) are not permanently different. The French la- 
borer will content himself with the rate of^ wages which 
prevails in France, ratlier than cross tlie Atlantic for a 
double remuneration. The English capitalist will pre- 
fer eight or ten per cent, profit with English society 
to the quadruple returns of California or Australia. 
The same inequality which we find in the average rates 
of wages and profits prevailing in different countries we 
find also in a less degree in the different departments of 
productive industry in the same countr3% What in the 
former case is done by the love of country to control 
the simple desire for wealth and aversion to labor, and 
to modify the resulting phenomena, is done in the latter 
by the ignorance and poverty of large classes which dis- 
able them for competing for the moi'e luci'ative employ- 
ments, and by opinions and prejudices respecting the de- 
gree of credit or respectability attaching to particul^* 
trades and employments, such as prevail in eveiy civil- 
ized community. 

It is evident, therefore, that an economist, arguing 
from the unquestionable facts of man's nature — the de- 
sire of vrealth and the aversion to labor — and arguing 



64 THE CHARACTER OF 

witli strict logical accuracy, may yet, if lie omit to no- 
tice other principles also affecting the question, be land- 
ed in conclusions which have no resemblance to exist- 
ing realities. But he can never be certain that he does 
not omit some essential circumstance, and, indeed, it is 
scarcely possible to include all : it is evident, therefore, 
that, as is the case in those deductive physical sciences 
to which I have alluded, his conclusions will correspond 
with facts 07ily in the absence of disturhing causes, 
which is, in other words, to say that they represent not 
positive but hypothetic truth.^ 

It thus appears that Political Economy, according as 
we consider it with reference to its premises or to the 
doctrines deduced from them, must be regarded in the 
one case as a positive, in the other as a hypothetical sci- 
ence. It is, however, to be remarked that that portion 
of the science which represents positive truth — its prem- 

1 In entire accord with this is M. A. E. Cherbuliez in his admirable 
" Precis de la Science Economique :" 

" Qu'est-ce qu'une verite scientifique ? C'est I'expression d'une idee, 
ou d'une loi gene'rale, a laquelle notre intelligence arrive en partant de 
certaines donnees fournies par I'observation immediate. Kous analysons 
un certain nombre de phenomenes pour en tirer ce qu'ils ont de commun ; 
puis nous raisonnons d'apres ces resultats de I'analyse, pour construire 
line theorie scientifique. Si nous avons bien observe, si notre raisonne- 
ment a ete coiTect, la consequence est aussi vraie que la donnee generale 
d'ou elle de'coule, mais elle ne pent I'etre davantage, ni d'une autre ma- 
niere. Or, la donnee generale n'est pas une realite ; elle n'est qu'une ab- 
straction, au moins dansia plnpart des cas. Pour I'obtenir, qu'avons- 
nous fait ? Nous avons de'pouille les phe'nomenes reels de ce qui les 
rendait complexes et divers, pour ne voir que ce qu'ils avaient de com- 
mun. Le re'sultat de cette analyse pent done fort bien ne representer 
rien de reel, ne ressembler exactement a aucun des phenomenes com- 
plexes de la realite. Des lors, la theorie la loi, que nous construisons 
d'apres ce resultat, peut aussi ne se verifier dans aucun des faits que nous 
verrons s'accomplir sous nos yeux. Cette theorie, cette loi n'en sera pas 
moins une verite' scientifique." — Tome I. pp. 10, 11, 



POLITIC A L ECONOMY. (55 

ises, namelv, or the facts, mental and physical, upon 
which it rests — belongs to it in common with many 
other, sciences and arts. All that is properly speaking 
Political Economy is that system of doctrines whicli 
has been or may be deduced from those premises ; and 
all this represents, as I have shown, hypothetical truth. 
It appears to me, therefore, clearly proper that Polit- 
ical Economy should be classed as a hypothetical sci- 
ence. 

But in thus describing Political Economy, I have vent- 
ured to dissent from the high authority of Mr. Senior. 
I shall, therefore, read you the passage in which he ex- 
presses his objections to regarding Political Economy as 
a hypothetical science : 

"The hypothetical treatment of the science appears to 
me to be open to three great objections. In the first place, 
it is obviously unattractive. No one listens to an exposi- 
tion of what might be the state of things under given but 
uni'eal conditions with the interest with Avhieh he hears a 
statement of what is actually taking place. 

"In the second place, a writer who starts from arbitra- 
rily assumed premises is in danger of forgetting from time 
to time their unsubstantial foundation, and of arguing as 
if they were true. This has been the source of much error 
in Ricardo. He assumed the land of every country to be 
of diiferent degrees of fertility, and rent to be the value 
of the difference between the fertility of the best and of 
the worst land in cultivation. The remainder of the prod- 
uce he divided into profit and wages. He assumed that 
wages naturally amount to neither more nor less than the 
amount of commodities which nature or habit has ren- 
dered necessary to maintain the laborer and his family in 
health and strength. He assumed that, in the progress of 
population and wealth, worse and worse soils are constant- 
ly resorted to, and that agricultural labor, therefore, be- 



QQ THE CHARACTER OF 

comes less and less proportionately productive; and be 
inferred that the share of the produce of land taken by 
the landlord and by the laborer must necessarily in- 
crease, and the share taken by the capitalist constantly 
diminish. 

" This is a logical inference, and would consequently have 
been true in fact, if the assumed premises had been true. 
The fact is, however, that almost every one of them is 
false. It is not true that rent depends on the difference in 
fertility of the different portions of land in cultivation. 
It might exist if the whole territory of a country were of 
uniform quality. It is not true that the laborer always re- 
ceives precisely the necessaries, or even what custom leads 
him to consider the necessaries of life. In civilized coun- 
tries he almost always receives much more; in barbarous 
countries he from time to time obtains less. It is not true 
that, as wealth and population advance, agricultural labor 
becomes less and less proportionately productive. . . . Mr. 
Ricardo was certainly justiiied in assuming his premises, 
provided that he was always aware, and always kept in 
mind, that they were merely assumed. This, however, he 
seems sometimes not to know, and sometimes he forgets. 
Thus he states, as an actual fact, that in an improving 
country the difficulty of obtaining raw produce constantly 
increases. He states as a real fact that a tax on Avages 
falls not on the laborer, but on the capitalist. . . . 

"A third objection to reasoning on hypothesis is its lia- 
bility to error, either from illogical inference or from the 
omission of some element necessarily incident to the sup- 
posed case. When a writer takes his jiremises from obser- 
vation and consciousness, and infers from them what he 
supposes to be real facts, if he have committed any grave 
error, it generally leads him to some startling conclusion. 
He is thus warned of the probable existence of an un- 
founded premise or of an illogical inference, and, if he be 
wise, tries back until he has detected his mistake. But 
the strangeness of the results of an hypothesis gives no 
warning. We expect them to differ from what we ob- 



POLITICAL ECONOMY. g7 

serve, and lose, therefore, this incidental means of testing 
tbe correctness of our reasoning." * 

Witli regard to the criticisms on Kicardo, I may per- 
lia[)S have an opportunity of adverting to them on some 
future occasion. I shall merely at present say that they 
appear to me to he unfounded. But what I am more 
immediately concerned in remarking is that the ohjec- 
tions of Mr. Senior to the hypothetical treatment of Po- 
litical Economy, so far as they possess weight, do not 
apply to this mode of treatment as I have just described 
it. According to that description, Political Economy 
has been represented as deriving its premises from ex- 
isting facts; it was to the inferences drawn from these 
premises only that the term " hypothetical " was applied.^ 
but as these inferences constituted the whole of what is 
properly called Political Economy, I conceived that Po- 
litical Economy was properly designated as an hypo- 
thetical science. But' it is to the character, not of the 
conclusions, but of the premises, that Mr. Senior's ob- 
jections apply. " A writer," he says, " who starts from 
aj'hitrarihj assumed ]}remises is in danger of forgetting 
their unsubstantial foundation." " No one listens to an 
exposition of what might be the state of things under 
given hut unreal conditions with the interest with which 
he hears a statement of what is actually taking place." 
" The strangeness of the results of an hypothesis gives 
no warning." It is evident that these are no objections 
to a system of doctrines which is founded, not on an 
hypothesis, but on facts. 

Mr. Senior's language, indeed, would seem to imply 
that, if the premises have a foundation in existing facts, 

' "Introductory Lecture on Political Economy," ]S.j2. p. G3. 



(38 THE CHARACTER OF 

tlie conclusions logically deduced from tliem must rep- 
resent actual plienoraeua. Speaking of Ricardo's rea- 
soning, he says, " This was a logical inference, and would 
consequently have been true in fact, if the assumed prem- 
ises had been true." But it is surely possible that the 
premises should be true, and yet incomplete — true so 
far as the facts which they assert go, and yet not includ- 
ing all the conditions which aifect the actual course of 
events. The laws of motion and of gravity are not arbi- 
trary assumptions, but have a real foundation in nature ; 
and it is a strictly logical deduction from those laws that 
the path of a projectile is in the course of a parabola ; 
yet, in point of fact, no projectile accurately describes 
Jthis course ; the friction of the air, which v/as not in- 
cluded in the premises, coming in to disturb the opera- 
tion of the other principles. In the same way (as I have 
already shown by several illustrations, and as will appear 
more fully hereafter) the doctrines of Political Econo- 
my, though based upon indubitable facts of human nature 
and of the external world, do not necessarily represent, 
and scarcely ever precisely represent, existing occur- 
rences. Indeed, Mr. Senior in another passage fully 
admits rtiis. " We shall not," he says, " it is true, from 
the fact that by acting in a particular manner a laborer 
may obtain liigher wages, a capitalist larger profits, or a 
landlord higher rent, be able to infer the further fact 
that the}' will certainly act in this manner ; but we shall 
be able to infer that they will do so in the absence of 
clisturhing causes.''^ Tliis concedes the only point for 
which I contend — the point, namely, that the conclu- 
sions of Political Economy do not necessarily represent 
actual events. The facts thus being agreed upon, the 



POLITICAL ECONOMY. ♦ (JQ 

question is reduced to tlic verbal one, viz., whether a 
science, the doctrines of whicli correspond with external 
realities only "in the absence of disturbing causes," is 
properly described as a positive or hypothetical science. 
It appears to me that a proposition can not correctly be 
said to represent "positive truth" which corresponds 
with facts only when no disturbing causes intervene — 
this condition, moreover, being one which is scarcely 
ever realized. Nor do I think the description would be 
less objectionable, even though, as Mr. Senior afterward 
remarks, it M'ere " frequently " possible " to state the 
cases in which these causes may be expected to exist, 
and the force M'ith which they are likely to operate." 
On the other hand, as I have already admitted, if the 
term be used, not with reference to what are properly 
the doctrines of Political Economy, but to the grounds 
on which these doctrines are built. Political Economy 
is as well entitled to be considered a "positive science" 
as any of those physical sciences to which this name is 
commonly applied. 

This i^oint, however, as I have said, is a purely verbal 
one, and as such is of little importance, provided the 
real character of the principles in question be borne in 
mind. This character, as I have endeavored to estab- 
lish, is identical with that of the physical principles 
which are deduced from the laws of gravitation and 
motion ; like these, the doctrines of Political Economy 
are to be understood as asserting, not what loill take 
place, but what would or what tends to take place, and 
in this sense only are they true.' If this admission con- 

* " Ce serait avec niissi pen de fondement, et anssi peu de siiccos (jiie 
vous attaqneriez la tlio'oric du libie cchange en alleguant que cevtains pays 



fjQ THE CHARACTER OF 

stitute an objection to Political Econoim-/ it is equally 
an objection to Astronomy, Mechanics, and to all those 

ont atteint, sous im regime de restrictions et d'entraves, un tres-hant 
degve de prospe'rite, tandis que d'autres pays, qui jouissaient d'une liberte' 
de commerce comparativement fort grande, sont reste's en arriere des pre- 
miers dans leur de'veloppement economique. On vous repondrait que la 
prospe'rite economique est le re'sultat complexe de plusieurs causes, parmi 
lesquelles il peut y en avoir de plus puissantes que la liberte. La the'orie 
que vous attaquez n'est point formulae en ces termes, que le de'veloppejnent 
economique des societes est proportionnel au degre de liberie dont elles 
jouissent, mais dans ceux-ci : que la liberty du commerce est plus favorable 
a ce developpement que les entraves et les restrictions, verite centre laquelle 
votre objection ne saurait avoir aucune force, puisque les faits alle'gues ne 
lui sont nullement contraires. Ces faits prouvent seulement que le 
developpement economique est un phenomene complexe, et que, chez 
les nations signalees par vous comme fournissant une preuve de I'inefii- 
cacite du libre echange. Taction de ce pvincipe a ete' neutralise'e par 
d'autres causes, telle que la situation geographique, ou Tinsecurite 
resultant de mauvaises lois, qui ont agi en sens oppose." — Precis de la 
Science Economique, Tome I. pp. 13, 14. 

' Mr. Jennings ("Natural Elements of Political Economy," p. 4) dis- 
poses of this defense of economic doctrine in the following fashion : 
"The doubting pupil is now dismissed with the assurance that the prin- 
ciples of Political Economy which he has been taught, if not true, have 
a tendency to be true ; that if found imperfect in the abstract {quare, con- 
crete ?), they are perfect in the concrete {quccre, abstract ?) ; and that an 
allowance must always be made for the influence of disturbing causes." 

I don't know that any further reply need be made to this than that 
given in the text, namely, that whatever be the A'alue of the objection, it 
applies with equal force to all sciences whatever whicli have reached the 
deductive stage. In no other sense is a dynamical law true than as ex- 
pressing "a tendency" influencing matter. Whether the result in any 
given case be such as the law asserts will depend, whatever be the branch 
of speculation, upon whether the necessai-y ceteris paribus, implied in its 
statement, is realized. The reason that attention has been drawn more 
to the influence of disturbing causes in the political and moral than in the 
physical sciences is sufficiently obvious. In those physical sciences which 
are sciences of observation, as Astronomy, the principles are few in num- 
ber and perfectly definite in character ; while in those physical sciences, 
as, e. g., Chemistry, in which the principles are more numerous and com- 
plex, we can avail ourselves of experiment. In the former case all, or 
nearly all, the causes influencing the result are known, and their effect 
may be calculated ; in the latter, all that are not required may be elimi- 



POLITICAL ECONOMY. 71 

physical sciences which combine deductive ^vith induc- 
tive reasoning/ 

And now I am in a position to attempt a definition 
of Political Economy, which I would define in either of 
the following forms : As the science which, accepting as 
nltimate facts the principles of human nature and the 
physical laws of the external world, as well as the con- 
ditions, political and social, of the several communities 
of men, investigates the laws of the production and dis- 
tribution of wealth which result from their combined op- 
eration ; or thus : As the science which traces the phe- 
nomena of the production and distribution of wealth up 
to their causes, in the principles of human nature and 
the laws and events — physical, political, and social — of 
the external world. 



nated. Eiit in the moral and political sciences, in which we have to deal 
■with human interests and passions, the agencies in operation at any given 
time in any given society are numerous, while, being in this case pre- 
cluded from experiment, we are unable to prepare the conditions before- 
hand with a view to preserving the necessary ceteris paribus. 
* See Mill's " System of Logic," book iii. chap. x. § 5. 



LECTUEE III 

OF THE LOGICAL METHOD OF POLITICAL ECONOMY. 

§ 1. In adverting in the opening of this course to the 
differences of opinion now existing respecting many fun- 
damental principles in Political Economy, I stated that 
these discrepancies appeared to me to be chiefly trace- 
able to the more loose and popular method of treating 
economic questions which has of late years come into 
fashion ; and I further stated that this cliange in the 
character of economic discussions was, as I conceived, 
mainly attributable to the practical success of econom- 
ic principles in the experiment of free trade — a success 
which, while it attracted a new class of adherents to 
the cause of Political Economy, furnished its advocates 
also with a new description of arguments. 

The method which we pursue in any inquiry must be 
determined by the nature and objects of that inquir}^ I 
was thus led in my opening lectures to consider the nat- 
ure and objects of Political Economy. In the present 
and following lectures I proceed to discuss the method 
which, having regard to what Political Economy proposes 
to accomplish, it is proper to pursue in its investigations. 

Let me recall briefly the description I have given of 
the nature and objects of Political Economy. You will 
remember I defined Political Economy as tlie science 
which investigates the laws of the production and dis- 



POLITICAL EC 0X0 MY. 73 

tribution of wealth, whicli result from the principles of 
liuman nature as they operate under the actual circum- 
stances of the external world. I also stated that those 
mental principles and physical conditions are taken by 
the political economist as ultimate facts, as the prem- 
ises of his reasonings, beyond wliicli he is not concerned 
to trace the causes of the phenomena of wealth, I next 
considered the nature of those ultimate facts, physical 
and mental, and found that, although so numerous as to 
defy distinct specification, there are yet some, the exist- 
ence and character of wliich are easily ascertainable, of 
such paramount importance in relation to the production 
and distribution of v.'ealth as to afford a sound and 
stable basis for deducing the laws of those phenomena. 
The principal of these I stated to be, first, the desire for 
physical well-being implanted in man, and for wealth as 
the means of obtaining it, and, as a consequence of this 
in conjunction with other mental attributes, the desire 
to obtain wealth at the least possible sacrifice ; second- 
ly, the principles of population as derived from the phys- 
iological character of man and his mental propensities ; 
and, thirdly, the physical qualities of the natural agents, 
more especially land, on which human industry is exer- 
cised. I also showed you that the most important of 
the subordinate principles and facts affecting the pro- 
duction and distribution of wealth, wiiicli come in to 
modify and sometimes to reverse the operation of the 
more cardinal principles, are also capable of being as- 
certained and appreciated, with sufficient accuracy at 
least to be taken account of in our reasonings, if not to 
be constituted as premises of tlie science ; and of these 
also I gave several examples. 

D 



/J-^. THE LOGICAL METHOD OF 

This, then, being the character of Political Econom}^, 
we have to consider by what means the end which it 
proposes — the discovery of the laws of the production 
and distribution of wealth— may be most effectually pro- 
moted. To the question here indicated, the answer most 
commonly given by those who take an interest in econom- 
ic speculation is — by the inductive method of inquiry; 
but this, without more explanation than is usually given, 
affords us little practical help. For what are we to un- 
derstand by the inductive method? What are the logic- 
al processes intended to be included under this form of 
words ? That is a question to which not many of those 
who talk of studying Political Economy "inductively" 
have troubled themselves to find an answer. The truth 
is, the expression "inductive method" is one used with 
much latitude of meaning even by writers on inductive 
logic — latitude of meaning which it will be very neces- 
sary, before determining whether induction be applicable 
or inapplicable to economic investigation, to clear up. 
In its more restricted and, as I conceive, its proper sense, 
induction is thus defined by Mr. Mill : " That operation 
of the mind by which we infer that what we know to 
be true in a particular case or cases will be true in all 
cases whicli resemble the former in certain assignable 
respects. In other words, induction is the process by 
which we conclude that what is true of certain individ- 
uals of a class is true of the whole class, or that what is 
true at certain times will be true in similar circumstan 
ces at all times.'" The characteristic of induction, as 
thus defined, is that it involves an ascent from particu- 

* "System of Logic," book iii. chap. ii. § 1. 



POLITICAL ECOXOMY. 



75 



lars to generals, from individual facts to laws. But the 
word is frequently used, and by writers of authority, in 
a sense much wider than this. For example, in his His- 
tory of the Inductive Sciences, Dr. Whewell invariably 
speaks of laws of nature, both ultimate and secondarj^, as 
being established by induction, and as being " induc- 
tions;" though from his own account of their discovery 
it is evident that this has frequently been accomplished 
quite as much by reasoning downward from general 
principles as by reasoning upward from particular facts. 
Sir John Ilerschel, too, not unfrequently uses the term 
with the same extended meaning, as embracing all the 
local processes of whatever kind by which the truths 
of physical science are established.* And Mr. Mill, in 
speaking of the inductive logic, describes it as compris- 
ing not merely the question, " how to ascertain the laws 
of nature," but also, " how, after having ascertained 
them, to follow them to their results." Such being the 
large sense in which "induction" has been employed by 
authoritative writers, it is obvious that, as thus under- 
stood, the inductive method can not properly be contrast- 
ed with the "deductive," since it includes among its 
processes this latter mode of reasoning. The proper an- 
tithesis to induction, in this wider meaning of the word, 
would be, not deduction, but rather that method of spec- 
ulation which is known as the " metaphysical," in obe- 
dience to which the inquirer, disdaining to be guided 
by experience, aims at reaching nature by transcending 
phenomena through the aid of the intuitions, real or sup- 
posed, of the human mind. If this latter mode of rea- 

' "Preliminaiy Discourse on Natural Pliilosopliy." 



76 THE LOGICAL METHOD OF 

soiling lias ever been followed in economic speculation, 
it has, at least, been long laid aside by all writers of any 
mark (with the possible exception of Mr, Ruskin) ; and 
therefore the question really at issue, as regards the log- 
ical method proper to Political Economy, is not as to the 
suitability for economic investigation of the inductive 
method as understood by such writers as Herschel and 
Whewell — this we may take as generally agreed upon — 
but the more specific problem as to the suitability, for 
the purpose in hand, of the several processes included 
under that comprehensive sense of the phrase ; in other 
words, to ascertain the place, order, and importance which 
induction (in tlie narrower meaning of the term), deduc- 
tion, verification, observation, and experiment ought to 
hold in economic inquiiy. 

The question being reduced to this issue, the answer 
of not a few people would still, I apprehend, be that 
induction (in the narrower sense, as distinguished from 
deduction), in combination with observation and experi- 
ment, constitutes the true path of economic inquiry. The 
student, according to this view, ought to commence by 
collecting and classifying the phenomena of wealth, 
prices, wages, rents, profits, exports, imports, increase or 
decline of production, changes in m^es of distribution: 
in a word, as far as they admit of determination, all the 
facts of wealth as presented in actual experience in dif- 
ferent countries ; and, having done so, should employ the 
results thus obtained as data by which to rise, by direcc 
or indirect inference, to the causes and laws which gov- 
ern them. Now, to perceive the utter futility, the nec- 
essary impotence of such a method of proceeding as a 
means of solving economic problems, one has only to con- 



rOLITICAL ECONOMY. Y7 

sider what the nature of those problems is. Tlie phe- 
nomena of wealth, as they present themselves to our ob- 
servation, are among the most complicated with which 
speculative inquiry has to deal. They are the result of 
a great variety of influences, all operati ug simultaneously, 
reinforcing, counteracting, and in various ways modifying 
each other. Consider, for example, the number of in- 
fluences that go to determine so simple a phenomenon 
as the selling price of a commodity — the great number 
and variety of conditions comprised under the expression, 
" the demand for it," the not less numerous and varied 
circumstances on which the "supply" depends, any change 
in any of which, if not accompanied by a compensating 
change in some of the co-existing conditions, must re- 
sult in a change in the actual phenomenon. Now, when 
this high degree of complexity characterizes phenomena; 
when they are liable to be influenced by a multiplicity 
of causes all in action at the same time ; in order to es- 
tablish inductively — that is to say, by arguing upward 
from particular facts — the coimection of such phenomena 
with their causes and laws, one condition is entirely in- 
dispensable : there must be the power of experimentation 
in the rigorously scientific sense of that word.' But this 
is a resource from which the student of social and eco- 
nomic problems is absolutely debarred. If any one doubt 
this, he has only to consider what an experiment, such 
as would in physical science be accounted a sufiicient 
ground for a sound induction, really implies; that it im- 
plies the possibility of finding or producing a set of 
known conditions as the medium in which the experi- 

' £'ee Mill's "Logic," bookiii. chap. x. 



78 I'llE LOGICAL METHOD OF 

ment is performed, and wliicli shall remain constant 
during its performance, A chemist, for example, seek- 
ing to discover the character of a new substance, places 
it under the receiver of an air-pump, or in a solution 
carefully prepared beforehand, all the constituents of 
which are accurately known to him ; and submits it, thus 
circumstanced, to certain influences — say to some known 
changes in temperature, or to electrical or galvanic ac- 
tion. Having taken these precautions, he is justified in 
attributing the changes w^hich result to the causes which 
have been put in operation ; and the mode in which the 
given substance may be affected by the agencies brought 
to bear upon it is thus ascertained. Where procedure 
of this kind is practicable — and it is practicable over the 
greater portion of the field of physical inquiry — "the 
plurality of causes " and " the intermixture of effects " do 
not offer any insuperable obstacle to the interpretation 
of nature by induction properly so called ; it has, in fact, 
been by this method that many of the most important dis- 
coveries in physical science have been made.* But from 
any thing in the least tantamount or comparable to this, 
the political economist is, I need scarcely say, necessarily 
excluded. The subject-matter of his inquiries is human 
beings and their interests, and with these he has no pow- 
er to deal after the arbitrary fashion permissible in the 
other case. He must take economic phenomena as they 
are presented to him in the w^orld without in all their 
complexity and ever-changing variety; but from facts 

* Discoveries, that is to say, oi ultimate laws. As Mr. Mill has shown, 
the law of complex effects is not amenable to the method of simple induc- 
tion, even when experiment may be conducted under the most rigid con- 
ditions. — " Logic," book iii. chaps, x. and xi. 



POLITICAL ECONOMY. 79 

as thus presented, if he decline to avail himself of any 
other path than that of strict induction, he may reason 
till the crack of doom without arriving at any conclusion 
of the slightest value. Beyond the merest empirical 
generalizations, advance from such data is plainly im- 
possible. No economic or social truth, meriting the name 
of scientific, ever has been discovered by such means, 
and it may be safely asserted none ever will be. What 
leads people to imagine the contrary is that in their rea- 
soning on social and political facts they are constantly 
in the habit of combining with their knowledge of phe- 
nomena motives and principles of conduct so familiar 
that their use of them as premises in their argument 
escapes their notice : they employ, that is to say, quite 
unconsciously to themselves, their knowledge of human 
nature, or of physical or political conditions, as a guide 
in their interpretation of the facts supplied to them by 
the statistician, and by this means, no doubt, conclusions 
more or less important are sometimes arrived at; but, 
then, this is not to reason inductively in the strict sense 
of that expression, but, so far as such reasoning admits 
of logical analysis, to combine the two processes of in- 
duction and deduction. It so happens, however, that the 
deductive portion of the operation, resting as it does on 
familiar assumptions of which no proof is given or need- 
ed, escapes notice, while the inductive, which generally 
has to deal with new and perhaps striking facts, strongly 
arrests attention ; and the opinion thus gains ground 
that purely inductive reasoning sufKces for the establish- 
ment of truths which are really reached by a very dif- 
ferent path. 

"The vulgar notion," says Mr. Mill, "that the safe meth- 



80 TUE LOGICAL METHOD OF 

ods on political subjects are those of Baconian induction, 
that the true guide is not general reasoning, but specific 
experience, will one day be quoted as among the most un- 
equivocal marks of a low state of the speculative faculties 
in any age in which it is accredited. Nothing can be more 
ludicrous than the sort of parodies on experimental reason- 
ing which one is accustomed to meet with, not in popular 
discussion only, but in grave treatises, when the affairs of 
nations are the theme. 'How,' it is asked, 'can an insti- 
tution be bad, when the country has prospered under it?' 
'How can such or such causes have contributed to the 
prosperity of one country, when another has prospered 
without them?' Whoever makes use of an argument of 
this kind, not intending to deceive, should be sent back to 
learn the elements of some one of the more easy physical 
sciences. Such reasoners ignore the fact of plurality of 
causes in the very case which affords the most signal ex- 
ample of it. So little could be concluded, in such a case, 
from any possible collation of individual instances, that 
even the impossibility, in social phenomena, of making ar- 
tificial experiments, a circumstance otherwise so prejudicial 
to directly inductive inquiry, hardly affords, in this case, 
additional reason of regret. For even if we could try ex- 
periments upon a nation or upon the human race, with as 
little scruple as M. Majendie tries them upon dogs or rab- 
bits, we should never succeed in making two instances 
identical in every respect except the presence or absence 
of some one indefinite circumstance. The nearest approach 
to an experiment in the philosophical sense, which takes 
place in politics, is the introduction of a new operative el- 
ement into national affairs by some special and assignable 
measure of Government, such as the enactment or repeal 
of a particular law. But where there are so many influ- 
ences at work it requires some time for the influence of 
any new cause upon national phenomena to become appar- 
ent ; and as the causes operating in so extensive a sphere 
are not only infinitely numerous, but in a state of perpetual 
altei'ation, it is always certain that before the effect of the 



POLITICAL ECONOMY. 31 

new cause becomes conspicuous enough to be a subject of 
induction, so many of tlie other influencing circumstances 
will have changed as to vitiate the experiment.'" 

The foregoing considerations suffice to show the utter 
inadequacy of the inductive method, in the narrower 
sense of that expression, as a means of solving the class 
of problems with which Political Economy has to deal, 
arising from the impossibility of employing experiment 
in economic inquiries under those rigorous conditions 
which are indispensable to give cogency to our induc- 
tions. But if Political Economy and social studies gen- 
erally are placed at this serious disadvantage as compared 
with the various bi'anches of physical research, on the 
other hand, as I shall now proceed to show, the former 
studies enjoy in their turn advantages peculiar to them- 
selves^ad vantages which, if duly turned to account, may 
perhaps be found to go some considerable way toward 
redressing the balance. 

§ 2. Let us endeavor to realize the position of a spec- 
ulator on the physical universe at the outset of physical 
inquiry. The most striking feature of the situation 
would be the extraordinary variety and complexity of 
the phenomena presented to his gaze, contrasted with the 
absence of any clear indication of the causes at work or 
the laws of their operation. He would find himself in 
the midst of a mighty maze, possibly not without a plan, 
but offering to the student no apparent clew by which to 
thread its intricacies. No wonder that in presence of 
such a problem the primitive thinker should have yearn- 

■ " 8y>tem of Logic," book iii. cliap. x. § 8 ; and see for a fuller discus- 
sion of the same question, book vi. chap, vii, of tiie same work. 

J) 2 



82 THE LOGICAL METHOD OF 

ed for some compreliensive and all-explaining principle, 
and should have directed his efforts at once and by what-, 
ever means to supply this capital requirement. " For the 
human mind," says Bacon, "strangely strains after and 
pants for this, that it may not remain in suspense, but 
obtain something fixed and immovable, on which as on 
a firmament it may rest in its excursions and disquisi- 
tions '" — some ultimate force, some paramount and all- 
pervading principle, by intellectual deductions from 
which light may be let in among the confused and jar- 
ring elements of the world. Accordingly, it was to the 
attainment of some such " Atlas for their thoughts " that 
the efforts of the earliest thinkers were invariably direct- 
ed. Nor were they wrong in the importance they at- 
tached to the possession of such a stand-point ; only un- 
fortunately they mistook the means of securing it, and, 
instead of proceeding by sap and mine, endeavored to 
carry the position by a cou^ de main. Each thinker 
made his guess. According to one, the ultimate prin- 
ciple was water; according to another, air; according to 
a third, number ; and so the game went on througli long 
ages ; till at length the truth began to dawn that, as our 
knowledge of physical causes and laws — even of their 
existence — comes to us exclusively through observation 
of their physical effects, it is by way of those effects — 
through the study of physical phenomena — that the ap- 
proach to the former must be made, if made at all : in 
other words, it began to be seen that the inductive meth- 
od was the only method suitable, at all events at the out- 
set of inquiry, to physical investigation. This truth, rec- 

' "De Aug. Scien.," lib. v. cap. iv. 



POLITICAL ECONOMY. §3 

ognized and acted on at intervals by a few here and 
there, was at length proclaimed by Bacon in language 
which arrested the attention of the scientific world, and 
has become a portion of the heritage of mankind. But 
the point to be attended to here is that the necessity for 
the method of induction as the path to physical discov- 
ery arose entirely from the fact that manhind have no 
direct knowledge of ultimate ^^hysiccd jprincijples. The 
law of gravitation and the laws of motion are among the 
best established and most certain of such principles; 
but what is the evidence on which they rest ? AVe do 
not find them in our consciousness, by reflecting on what 
passes in our minds ; nor can they be made apparent to 
our senses. That every particle of matter in the uni- 
verse gravitates, each toward the rest, with a force which 
is directly according to the mass, and inversely according 
to the square of the distance — or that a body once set in 
motion will, if unimpeded by some counter force, con- 
tinue forever in motion in the same direction and with 
unimpaired velocity — these are propositions which can 
only be established by an appeal to the intellect; the 
proof of all such laws ultimately resolving itself into 
this, that, assuming them to exist, they account for the 
phenomena. They are not the statement of any actual 
experiences, but, in the words of Mr. Herbert Spencer, 
" truths drawn from our actual experiences, but never 
presented to us in any of them." "Men culled," says 
Dr.Whewell, "the abstract rule out of the concrete ex- 
periment; although the rule was in every case mixed 
with other rules, and each rule could be collected 
from the experiment only by supposing the othei's 



34: THE LOGICAL METHOD OF 

known."* And wliat is true of the laws of gravitation 
and of motion is true equally of all the ultimate prin- 
ciples of physical knowledge. Thus the nndulatory 
theory of light, the theory of the molecular constitution 
of matter, the doctrine of vis inerticB — all alike elude 
direct observation, and are only known to us through 
their physical effects. 

The inductive method, therefore, in the narrower sense 
of the expression, formed the necessary and inevitable 
path by which, having regard to the limitation of the 
human faculties, physical investigation was bound, in the 
outset of its career, to proceed. I say in the outset of 
its career; because, so soon as any of the ultimate laws 
governing physical phenomena were established, a new 
path by which to approacli physical problems would at 
once be opened. The inquirer would have secured that 
"Atlas for his thoughts" for which the earlier speculators 
sighed; and the method of deduction — incomparabl}^, 
when conducted under the proper checks, the most pow- 
erful instrument of discovery ever wielded by human in- 
telligence — would now become possible. What, accord- 
ingly, we find in the history of the most important phys- 
ical sciences, is this : a long period of laborious inductive 
research, during which the ground is prepared and the 
seed sown, terminating at length in the discovery — most 
frequently made at nearly the same time by several in- 
dependent inquirers — of some one or two great physical 
truths ; and then a period of harvest, in which, by the 
application of deductive reasoning, the fruits of the great 
discovery in the form of numerous intermediate princi- 

' Whewell's " History of the Inductive Sciences," vol. ii. p. 2G. 



POLITICAL ECONOMY. 85 

pies connecting tlie higher principles with the facts of 
experience are rapidly gathered in. Thus the progress 
of mechanical science was slow, notwithstandhig what 
had been done by Archimedes and the ancients, till the 
primary dynamical principles were established by Gali- 
leo and his contemporaries ; but these once firmly seized, 
and the deductive process applied to the premises thus 
obtained, a crowd of minor discoveries in mechanics, hy- 
drostatics, and pneumatics, all involved in the more fun- 
damental principles, followed in rapid succession.' It is 
thus that most of those middle principles, the axlomata 
media of physical science, have been arrived at. But it 
is not in the discovery of axlomata media only that the 
potency of the deductive process has been exemplified. 
In combination with induction it has frequently been 
the means by which the highest physical generalizations 
have been reached. Of this the most eminent example 
is the law of gravitation itself, arrived at by Newton in 
the main by way of deduction from the dynamical prem- 
ises supplied by the discoveries of Galileo. In effect the 
problem, as it came to the hands of Newton, had assumed 
nearly this form — to find a force which, in conjunction 
and in conformity with the laws of motion, will produce 
the planetary movements, already generalized by Kepler.^ 
The law of gravitation, indeed, illustrates the potency of 
the deductive method in a double sense. It is at once 
its richest fruit and its most fruitful source. It was, as 
I have just intimated, a deduction from the laws of dy- 
namics brought to the interpretation of the phenomena 
of the planetary movements ; and, once established, it 

' " History of the Inductive Sciences," book vi. clmps. iii.-vi. 
" Ibid., book vii. chap. ii. 



86 THE LOGICAL METHOD OF 

became tlie great generative principle from which, al- 
ways in connection with the data furnished by observa- 
tion, all the later discoveries of astronomy have been de- 
rived. 

"As the discovery itself was great beyond former ex- 
ample, the features of the natural sequel to the discovery 
were also on a gigantic scale ; and many vast and labori- 
ous trains of research, each of which might in itself be con- 
sidered as forming a wide science, and several of which have 
occupied many profound and zealous inquirers from that 
time to our own day, come before us as parts only of the 
verification of Newton's theory. Almost every thing that 
has been done and is doing in astronomy falls inevitably 
under this description ; and it is only when the astronomer 
travels to the very limits of his vast field of labor that he 
falls in with phenomena which do not acknowledge the 
jurisdiction of the Newtonian legislation."' 

It appears, then, that the path of induction was only 
exclusively followed in physical research pending the 
discovery of ultimate laws. So soon as the first great 
physical generalization was established, deduction came 
at once into play, leading, in combination with induction 
and the means of verification it afforded, to a rapid ex- 
tension of physical knowledge. Of course, as new phys- 
ical generalizations of the higher order were established, 
the scope for the employment of the deductive process 
would be enlarged ; and the effect would be a gradual 
change in the logical character of the physicist's prob- 
lem, and by consequence in his method. At the outset of 
investigation the problem was — given the phenomena, 
to find the causes and laws, and the only feasible course 

^ See "History of the Inductive Sciences," vol. ii. p. 195. 



POLITICAL ECONOMY. 



87 



of procedure was induction ; but, as more and more prin- 
ciples were discovered, the problem came gradually to as- 
sume another form, namely this — given the phenomena 
a7id certain causes and laws affecting them, to find the 
other causes and laws implicated in the results. The 
student was gradually getting possession of both ends 
of the chain, and his task was being narrowed to deter- 
mining the intervening links. 

§ 3. I have been at pains to bring clearly before your 
minds the logical nature of the physical problem as it 
presented itself at the outset of speculation to the inves- 
tigator of physical nature, and as it now presents itself, 
in order that you may fairly appreciate in what degree 
the analogy holds between physical investigation and 
the class of inquiries with which we are here concerned. 
Some pages back I remarked that if the economist was 
at a disadvantage as compared with the physical investi- 
gator in being excluded from experiment, he had also 
some compensating circumstances on liis side. The nat- 
ure of these compensating circumstances will now be- 
come apparent. T/ie econo'inist starts with a knoioledge 
of ultimate causes. He is already, at tlie outset of his 
enterprise, in the position which the physicist only at- 
tains after ages of laborious research. If any one doubt 
this, he has only to consider what the ultimate principles 
governing economic phenomena are. As explained in 
my last lecture, they consist of such facts as the following : 
certain mental feelings and certain animal propensities 
in human beings; the physical conditions under wiiich 
production takes place ; political institutions ; the state 
of industrial art : in otlier words, tlie premises of Polit- 



88 THE LOGICAL METHOD OF 

ical Economy are tlie conclusions and proximate phe- 
nomena of otlier branches of knowledge. These are tlie 
sources from which the phenomena of wealth take their 
rise, precisely as the phenomena of the solar system take 
their rise from the physical forces and dynamical laws 
of the physical universe; precisely as tlie phenomena of 
optical science are the necessary consequences of the 
Avaves of the luciferons medium striking on the nerves 
of the eye. For the discovery of such premises no elabo- 
rate process of induction is needed. In order to know, 
e. g., why a farmer engages in the production of corn, 
why he cultivates his land up to a certain point, and why 
he does not cultivate it further, it is not necessary that 
we should derive our knowledge from a series of gen- 
eralizations proceeding upward from the statistics of corn 
and cultivation, to the mental feelings which stimulate 
the industry of the farmer, on the one hand, and, on tlie 
other, to the physical qualities of the soil on which the 
productiveness of that industry depends. It is not nec- 
essary to do this — to resort to this circuitous process — 
for this reason, tliat we have, or may have if we choose 
to turn our attention to the subject, direct knowledge of 
these causes in our consciousness of what passes in our 
own minds, and in the information which our senses con- 
yajf or at least are capable of conveying, to us of exter- 
nal facts. Every one who embarks in any industrial pur- 
suit is conscious of the motives which actuate him in 
doing so. He knows that he does so from a desire, 
for whatever purpose, to possess himself of wealth ; he 
knows that, according to his lights, he will proceed to- 
ward his end in the shortest way open to him ; that, if 
not prevented by artificial restrictions, he will buy such 



POLITICAL ECONOMY. 89 

materials as lie requires in the cheapest market, and sell 
the commodities which he produces in the dearest. Ev- 
eiy one feels that in selecting an industrial pursuit, 
where the advantages are equal in otlier respects, he will 
select that in which he may hope to obtain the largest 
remuneration in proportion to the sacrifices he under- 
goes ; or that in seeking for an investment for what he 
has realized, he will,"vvhere the security is equal, choose 
those stocks in which the rate of interest to be obtained 
is highest. With respect to the other causes on which 
the production and distribution of wealth depend — the 
physical properties of natural agents, and the physiolog- 
ical character of human beings in regard to their capac- 
ity for increase — for these also direct proof, thongh of a 
different kind, is available ; proof M'hich appeals not in- 
deed to our consciousness, but to our senses. Thus, e. ^., 
the law of the diminishing productiveness of the soil to 
repeated applications of capital, if seriously questioned, 
is capable of being established by direct physical experi- 
ment upon the soil, of the result of which our senses may 
be the judges. If political economists do not perforin 
this experiment themselves in order to establish the fact, 
it is onl}' because every practical farmer performs it for 
them. In the case of the physical premises, therefore, 
of Political Economy, equally with the mental, we are 
entirely independent of those refined inductive processes 
by which the ultimate truths of physical science are es- 
tablished. 

§ 4. The economist ma}^ thus be considered at the 
outset of his researches as already in possession of those 
ultimate principles governing the phenomena which form 



90 THE LOGICAL METHOD OF 

the subject of his study, the discovery of which in the 
case of physical investigation constitutes for the inquirer 
his most arduous task ; but, on the other hand, he is ex- 
cluded from the use of experiment. There is, however, 
an inferior substitute for this powerful instrument at his 
disposal, on which it may be worth while here to say a 
few words. I refer to the employment of hypothetical 
cases framed with a view to the pui'pose of economic in- 
quiry. For, although precluded from actually produc- 
ing the conditions suited to his purpose, there is nothing 
to prevent the economist from bringing such conditions 
before his mental vision, and from reasoning as if these 
only were present, while some agency comes into opera- 
tion — whether it be a human feeling, a material object, 
or a political institution — the economic character of 
which he desires to examine. If, for example, his pur- 
pose be to ascertain the relation subsisting between the 
quantity of money in circulation in any given area of 
exchange transactions and its value, he might make some 
such supposition as this : 1, in a given state of produc- 
tive industry a certain number and amount of exchange 
transactions to be performed; 2, a certain amount of 
money in circulation ; 3, a certain degree of efficiency 
(in the sense explained by Mr. MilP) in the discharge 
of its functions by this money ; Ikstly, a certain addition 
made to the money already in circulation. These con- 
ditions being supposed, and being also supposed to re- 
main constant, the scene of the experiment would be 
prepared. It is true the action of the added money can 
not be made apparent to the senses of the economist, or 

* "Principles of Political Economj-," vol. ii. p. IS. Sixth Edition. 



POLITICAL ECONOMY. 91 

to those of his hearers or readers, but from his knowl- 
edge of the purposes for which mouey is used, and of 
the motives of human beings in the production and ex- 
change of wealth, it will be in his power to trace the 
consequences which in the assumed circumstances would 
ensue. These he would find to be an advance in the 
prices of commodities in proportion to the augmentation 
of the monetary circulation; a result from which lie 
M'ould be justified in formulating the doctrine that, 
other things being the same, the value of money is in- 
versely as its quantity. Or again, supposing the object 
be to ascertain the law governing agricultural rent, the 
economist might take as his hypothesis the following 
conditions : 1, a certain state of agricultural skill ; 2, a 
capacity of the soil to yield certain returns on the appli- 
cation of capital and labor in certain proportions; 3, a 
tendency in the soil to yield diminished proportional 
returns after a certain point in cultivation has been 
reached ; 4, different degrees of fertility in different 
soils ; lastly, the land owned by one class of persons, 
while another, in possession of capital, desires to occu- 
py it for the purpose of cultivation. These suppositions 
being made, he would then take account of the known 
motives, on the one hand, of farmers, on the other of 
landlords in their dealings concerning rent, and would 
deduce from these, in connection with the supposed cir- 
cumstances, the amount of rent w^iich the latter would 
be content to receive and the former to pay. The con- 
ditions determining agricultural rent would thus be as- 
certained. It is true the conclusion arrived at would 
represent hypothetical truth merely — that is to say, 
would express a law true only in the absence of dis- 



92 TUE LOGICAL METHOD OF 

tui-bing causes; but, as I have already explained,^ so 
much, qualification as this must be understood of all 
scientific laws whatever. Putting aside mere empirical 
generalizations, no law of nature, it matters not whether 
the sphere of inquiry be physical, mental, or economic, 
is true otherwise than hypothetically — than in the ab- 
sence of disturbing causes. The process, then, which I 
have been describing is one mode by which a knowl- 
edge of economic laws may be reached; and I think 
you will perceive that it is in the nature of an experi- 
ment conducted mentally. I am far, indeed, from sa}'- 
ing that it is not very inferior, as an agency for the dis- 
covery of truth, to the sensible physical process for 
which it is the substitute ; since, while the actual opera- 
tions of nature can not err, there is in a hypothetical ex- 
periment always the danger, not only that some of the 
conditions supposed to be present may, in the course of 
ratiocination, be overlooked, but also of a flaw in the 
reasoning by which the action of the particular cause 
under consideration is established. And this renders it 
expedient that the process in question should, as far as 
possible, be supplemented by such sorts of verification as 
economical inquiry admits of. For example, it is open 
to the economist, having worked out his problem in the 
manner described, to look out for some actual instance 
which approximates in as many of its principal circum- 
stances as possible to those of' his hypothesis. Having 
found one, he can observe how far the results realized 
in the actual case correspond with his hypothetical con- 
clusions ; and in case, as would usually happen, the cor- 

' Ante, pp. 69, 70. 



POLITICAL ECONOMY. 93 

respondence was not complete, lie would liavc to consider 
how far the discrepancy admitted of being explained by 
reference to the presence of known disturbing causes. 
Unfortunately, for reasons already indicated, verification 
can never in economic inquiry be otherwise than very im- 
perfectly performed ; but this notwithstanding, if care- 
fully conducted it is often capable of furnishing suffi- 
cient corroboration to the processes of deductive reason- 
ing to justify a high degree of confidence in the conclu- 
sions thus obtained. 

In this way may hypothesis be made to serve as in 
some sort a substitute for experiment in economic inves- 
tigation ; and in point of fact it has been by this means 
that not a few important doctrines of the science have 
been worked out. The writer who has emj^lo^-ed this 
particular resource most freely and with the most effect 
is Ricardo ; nor could a more decisive proof be given of 
the ignorance generally prevailing on the subject of meth- 
od in Political Economy than is furnished by the flippant 
attacks which have been made upon this eminent think- 
er from so many quarters on this account. In employ- 
ing the method of reasoning on In'pothetical cases, Ri- 
cardo, in effect, employed, as far as the nature of his 
problem and the circumstances of the case permitted, 
that experimental method Avliich those who would dis- 
parage his great achievements affect to extol, but the 
real nature of which, as their criticisms show, they so lit- 
tle understand. Here is an example of the manner in 
which he could wield this instrument of economic re- 
search. The question under consideration was the fun- 
damental principle of international trade, and Ricardo 
wished to show that it mi<xht be the interest of a country 



94 TEE LOGICAL METHOD OF 

to import an article from anotlier, even tliongli it were 
in its power to produce the imported article itself at less 
cost than it was produced at in the country from wliich 
it came. This, at first view, paradoxical position, Ricar- 
do thus by means of a simple hypothesis (which, while it 
divested the problem of all its accidental complications, 
brought into clear light the few essential conditions on 
which its solution depended) was enabled to establish ; it 
being evident that, under the supposed circumstances, the 
known motives of men in the pursuit of wealth could 
only lead to the very result asserted. " Two men," he 
says, " can both make shoes and hats, and one is superior 
to the other in both employments ; but in making hats 
he can only exceed his competitor by one fifth, or 20 per 
cent., while in making shoes he can excel him by one 
third, or 33 per cent. ; will it not be to the interest of 
both that the superior man should employ liimself exclu- 
sively in making shoes, and the inferior man in making 
hats?"^ 

In further confirmation of what I have said as to tlie 
nature of the ultimate premises of the physical sciences 
in contrast with those of Political Economy, I would ask 
you now to consider the different use to which hypotlie- 
sis is put in the former department of knowledge. In 
Political Economy, as we have just seen, hj^pothesis is 
used in order to supply the reasoner mentally with those 
known and constant conditions which are essential to the 
development deductively of the fundamental assump- 
tions of the science, but from the production of which 
in actual existence he is precluded by the nature of the 

' Ricavdo's Works, McCiillocli's edition, p. 77. 



POLITICAL ECONOMY. 95 

case ; and in this way, as I have explained, it may be re- 
garded as a substitute for experiment ; in physical inves- 
tigation, on the other hand, as the required conditions 
can actually be produced, there is no need to assume 
them hypothetically, and accordingly this is never done. 
For what pm-pose, then, is hypothesis used in physical 
research? Always as a means of arriving at ultimate 
causes and laws. Such causes and laws not being sus- 
ceptible of direct proof, through an appeal to the con- 
sciousness or senses, conjecture, guess, hypothesis, is the 
natural, as it is in truth the only possible path by which 
they may be reached. Accordingly, the physicist frames 
an hypothesis as to the nature of those causes and laws, 
and having done so, proceeds to bring together conditions 
fitted to test the correctness of his guesses — that is to say, 
he institutes experiments to rerify his hypothesis. Such 
a course would be obviously unsuitable in the analogous 
case in economic investigation. Xo one thinks of fram- 
ing an hypothesis as to the motives which induce men 
to engage in industry, to prefer remunerative to unre- 
munerative occupations, or to embark their earnings in 
investments which, c^^<?ri5_^^ar/5w5, promise the best re- 
turns ; or, again, as to the causes which, in a given state 
of agricultural knowledge and skill, set a permanent lira- 
it to the application of capital and labor to the soil ; 
any more than as to those on which depend the continu- 
ance and growth of population. Conjecture here would 
manifestly be out of place, inasmuch as we possess in 
our consciousness and in the testimony of our senses, as 
I have already shown, direct and easy proof of that 
which we desire to know. In Political Economy, ac- 
cordingly, hypothesis is never used as a help toward the 



96 THE LOGICAL METHOD OF 

discovery of ultimate causes and laws; jnst as in physic- 
al investigation it is never used as a substitute for ex- 
periment/ 

Such, then, are the positions respectively of the econo- 
mist and of the physical philosopher with reference to 
the logical nature of the problem with which each has to 
deal. And this being so, what can argue greater igno- 
rance of the conditions of the case — at once of the real 
nature of the precedents furnished by the physical sciences, 
and of the character of the economic problem, than to 
appeal to the former, as is constantly done, in justifica- 
tion of the exclusive use of the purely inductive method 
in economical research. It is to overlook alike the pe- 
culiar weakness and the peculiar strength of the econ- 
omist's position. It is to advocate for Political Econ- 
omy a method which is only powerful in physical inves- 
tigation, because the physicist can employ it in connec- 
tion with conditions from the realization of which the 
economist is from the nature of his inquiry precluded ; 
and to refuse to employ an engine of discovery ready to 
our hands, which the physicist has spent centuries of la- 
borious speculation in his efforts to attain, and which, 
once possessed, has proved the most potent of all his ap- 
pliances. What the precedents of physical science, right- 
ly understood, teach the economist is to regard deduction 
as his principal resource ; the facts furnished by observa- 
tion and experience being employed, so far as circum- 
stances permit, as the means of verifying the conclusions 
thus obtained, as well as, where discrepancies are found 
to occur between facts and his theoretical reasonings, 

' See Appendix C. 



POLITICAL ECONOMY. Q^ 

for ascertaining the nature of the disturbing causes to 
which such discrepancies are due. It is in this way, and 
in this way only, that the appeal to experience is made 
in those physical sciences which have reached the deduct- 
ive stage — that is to say, which in the logical character 
of their problems present any real analogy to economic 
science. 

§ 5. In connection with the processes just referred to 
of verification and the discovery of disturbing causes, or 
(to express the same idea differently) the discovery of 
the minor influences affecting economic phenomena, we 
find the proper place of statistics in economic reasoning. 
Statistics are collections of facts arranged and classified 
with a view to particular inquirieg ; and it is by avail- 
ing ourselves of this systematized method of observation 
that we can most effectually check and verify the accu- 
racy of our reasoning from the fundamental assumptions 
of the science ; while the same expedient offers also b}'' 
much the most efficacious means of bringing into view the 
action of those minor or disturbinsc a2:cncies which mod- 
ify, sometimes so extensively, the actual course of events. 
The mode in which these latter influences affect the phe- 
nomena of wealth is, in general, unobvious, and often in- 
tricate, so that their existence does not readily discover 
itself to a reasoner engaged in the development of the 
more capital economic doctrines. In order to their de- 
tection, therefore, attention must be drawn to the effects 
which they produce ; and this, as I have said, can be 
best done by the use of statistics in constant connection 
with deductive ratiocination. 

It is important to observe that tlie relation of statistics 

E 



98 THE LOGICAL METHOD OF 

to Political Economy is in no respect different from that 
in whicli tliey stand to other sciences which have reach- 
ed the deductive stage. The registered observations of 
the astronomer are the statistics of astronomy, which it 
is his business to compare with the conclusions theoretic- 
ally evolved from the dynamical principles constituting 
the premises of his science, and for purposes strictly an- 
alogous to those which have just been described.* In 
those sciences, indeed, which admit of experiment, as, 
e. g., chemistry, formal statistics are little used. Statistics 
here are unnecessary, because experiment affords, only in 
a more efficacious way, the means of instituting the same 
comparison.^ But what are known by the chemist as 
" residual phenomena " are precisely analogous to those 
discrepancies betw^eei^ the conclusions of the economist 
and the facts of the statistician to which I have been 
adverting, and lead in the same way to the discovery of 
new elements or principles before overlooked. 

Such is the method of investigation which the nature 
of the evidence available in economic inquiry, as well as 



^ " For example : the return of the comet predicted by Professor Encke, 
a great many times in succession, and the general good agreement of its 
calculated with its observed place during any one of its periods of visibil- 
ity, would lead us to say that its gravitation toward the sun and planets 
is the sole and sufficient cause of all the phenomena of its orbitual motion ; 
but when the effect of this cause is strictly calculated and subducted from 
the obseiwed motion, there is found to remain behind a residual phenome- 
non, which would never have been otherwise ascertained to exist, which is 
a small anticipation of the time of its reappearances or a small diminution 
of its periodic time, which can not be accounted for by gravity, and whose 
cause is therefore to be inquired into. Such an anticipation would be 
caused by the resistance of a medium disseminated thi-ough the celestial 
regions ; and as there are other good reasons for believing this to be a 
vera causa, it has therefore been ascribed to such a resistance." — Herschers 
Natural Philosophy, ■p. 156. 



POLITICAL ECONOMY. 99 

the analogy of the physical sciences, so far as they cor- 
respond with it in the logical character of their problems, 
suggest as proper to be followed in Political Economy ; 
and such also is the method which has in fact been fol- 
lowed, wliether it has been distinctly stated or not, by all 
those writers, from Tiirgot and Adam Smith to Mr. Mill, 
who have contributed most effectually to the advance- 
ment of economic knowledge. The detailed evidence 
for this statement, however, may be fitly reserved for an- 
other lecture. 



LECTUEE IV. 

OF THE LOGICAL METHOD OF POLITICAL ECON- 
OMY.— { Continued.) 

§ 1. I CONCLUDED my last lecture by remarking that 
the method of investigation which — guided by the nat- 
ure of the evidence available in economic inquiry, as 
well as by the analogy of physical sciences, so far as this 
is pertinent — we found proper for Political Economy, is 
also the method which has in fact been followed, whether 
formally avowed or not, by those writers who have con- 
tributed most effectually to the progress of economic 
knowledge. The course taken by these thinkers may, in 
general, be thus described. Those principles of the sci- 
ence which require no proof, depending directly upon 
consciousness, as, for example, the desire to obtain wealth 
at the least sacrifice, they have, in general, silently as- 
sumed, proceeding at once to argue on them without 
formally stating them. Those which are liable to dis- 
pute, such as the physical properties of productive agents, 
'and the physiological character of human beings in rela- 
tion to their capacity of increase, they have established 
by such evidence as is suitable. The celebrated essay 
of Malthus on Population, e. g., is almost wholly devoted 
to the establishment and illustration of the two latter 
principles — viz., the capacity of human beings to multi- 
ply their species, and the capacity of the earth under as- 



POLITICAL ECONOMY. IQl 

Slimed conditions of agricultural skill to yield subsist- 
ence. The foundations of the primary principles being 
thus laid, tliey have proceeded to consider the conse- 
quences which result in the production and distribution 
of wealth ; how these principles, coming into action un- 
der the guidance of human intelligence, lead naturallj'' 
to the division of labor, to the mutual interchange of 
products among the different producers, to the use of 
money as a medium of exchange, and, as communities 
advance, to the rise of rent, and the slower progress of 
population. They have proceeded then to trace the gen- 
eral laws of value, of rent, of profits, and of wages, which 
result from the operation of the same principles. But 
the conclusions thus arrived at being frequently found 
to differ in various degrees from the observed facts, their 
attention has thus been drawn (in strict conformity with 
the order which I have described) to the influence of 
subordinate principles in modifying the force of the 
more powerful causes. Thus, the chapter of Adam 
Smith on the different rates of wages in different em- 
ployments is wholly an inquiry into the nature and 
force of such secondary principles. The chapter of Ri- 
cardo on " Foreign trade," and those of Mr. Mill on " In- 
ternational values," are inquiries of a. similar character ; 
the object being to discover those special causes which, 
in the case of international exchanges, intervene to mod- 
ify the general laws of value. Again, Mr. Senior's essay 
" On the Cost of obtaining Money" is an example of the 
same kind. 

But perhaps tlie best example which has yet been fur- 
nished of the proper use of statistics in the advancement 
of economic science is afforded by Mr. Tooke in his well- 



102 THE LOGICAL METHOD OF 

known " History of Prices." One of the first and most 
elementary principles in the theory of money is that, ce- 
teris jparihis, the value of money is inversely as its quan- 
tity. In the discussions which took place during the 
earlier part of the present century on the phenomena of 
prices and the circulation, this principle was assumed as 
true, not simply hypothetically — i. e., in the absence of 
disturbing causes — but as representing the sole, or at least 
principal, cause regulating general prices. By the ultra- 
bullionists on the one hand, and by the advocates of an 
inconvertible currency on the other, it was alike taken 
for granted that all fluctuations in the prices of commod- 
ities are to be attributed, at least in a principal degree, 
to alterations in the amount of money, including under 
that term coin and bank-notes.^ ITow the result of Mr. 
Tooke's elaborate examination of the commercial and 
monetary history of that period was to show that no 
such correspondence between prices and the circulation 
as these different authorities assumed was, in fact, to be 
found. Here, then, was an example of that discrepancy 
between the conclusions of abstract reasoning and actual 
phenomena which it is the business of statistical investi- 

1 To such an extent did this delusion prevail, that the celebrated Bullion 
Committee of 1810, in its admirable though not faultless report, finding 
that the note circulation had at that time increased in amount, and con- 
cluding from other considerations that it was excessive, took it for grant- 
ed, without inquiry, that " the prices of all commodities had risen." (Ee- 
port, p. 11.) I say without inquiry, 1st, because no witnesses with refer- 
ence to this point were examined ; and, 2d, because, had they inquired, it 
is certain they would have found the facts to be precisely the reverse of 
what they had assumed ; the reaction consequent upon the excessive spec- 
ulation of 1809 and 1810 having then taken place, and the general markets 
being in a state of extraordinary depression. Vide Tooke's ' ' History of 
Prices," vol. i. chap. v. section 2. Mr. Husldsson, in his "Question, etc., 
Stated," also makes the same assumption. 



POLITICAL ECONOMY. 103 

gation to bring to light. The inevitable inference, there- 
fore, was, either that the logical process by which these 
conclusions had been established was unsound, or that 
some cause influencing the phenomena had been over- 
looked." Mr. Tooke showed that a mistake in both these 
respects had been committed : 1st, a mistake of reason- 
ing which failed to discriminate between the character 
of money (properly so called) ^ in its effect upon prices, 
and that of convertible notes issued by banks in the dis- 
count of bills ; and, 2d, a mistake in overlooking the dis- 
turbing influence which other forms of credit, equally 
with bank-notes, when employed as purchasing power, 
exercise upon prices. The further investigation of this 
question by Mr. Tooke has resulted in a theory of prices 
which, as regards the connection between prices and the 
note circulation, directly reverses some of the former 
maxims — asserting, for example, that the amount of the 
note circulation, instead of being the efHcient cause 
which determines the general level of prices, is itself an 
effect of tjiis phenomenon, the fluctuations in which do 
not follow but precede the fluctuations in the circula- 

' It is not to be supposed that the discrepancy alhided to goes the length 
of invalidating the elementary law that, ceteris paribus, the value of money 
is inversely as its qiiantit_v. This still rests upon the same basis of mental 
and physical facts as every other doctrine of Political Economy, and must 
always constitute a fundamental principle in the theory of money. It 
merely showed that in the practical case the condition ceteris paribus was 
not fulfilled. The fact in question is no more inconsistent with the eco- 
nomic law, than the non-correspondence of a complex mechanical phenom- 
enon with what a knowledge of the elementary laws of mechanics might 
lead a tyro to expect is inconsistent with these elementary laws. A 
guinea dropped through the air from a heiglit falls to the ground more 
quickly than a feather; yet no one would on this account deny tlie doc- 
trine that the accelerating power of gravity is the same for all bodies. 

^ See Tooke's " History of Prices," vol. iv. chap. ii. section 2. 



104: THE LOGICAL METHOD OF 

tioii ; and, in addition, affording for the first time an ex- 
planation of a large and important class of monetary 
phenomena. 

Such, then, is the method of inquiry in Political Econ- 
omy, which not only the nature of the case suggests, but 
which analogy and authority alike support. 

§ 2. In order to illustrate more clearly the character 
of this liiethod, and the assistance which a clear appre- 
hension of it may afford in discussing economic ques- 
tions, I shall now take a particular example of an eco- 
nomic law, and examine the nature of the assertion 
which it contains, and the kind of proof by which it 
may be established or refuted. 

It is a very fundamental law in Political Economy 
that " cost of production regulates the value of freely 
produced commodities." By the " cost of production " 
of a commodity, I may as well explain, is meant the 
labor, abstinence, and risk which is necessary in order 
to produce that commodity; and by the expression 
"freely produced commodities" is to be understood 
commodities which may be produced in any required 
quantity by any one who chooses to go to the trouble 
and expense of producing them. This, then, being the 
meaning of the words, let us consider what is the nature 
of the assertion which is made when it is said that " cost 
of production regulates value." 

Is it meant that freely produced commodities invari- 
ably and without exception exchange for one another 
in proportion to their respective costs of production ? — 
in other words, that in every instance in which such 
•commodities are exchanged their costs of production 



POLITICAL EC 0X0 MY. 105 

are precisely equal ? If this is what tlie doctrine means, 
the assertion is clearly nntrue. Wheat and barley, e. g., 
in England are freely produced commodities, and a 
stone of average wheat will, at present prices [1856-57], 
exchange for little more than a stone of average barley ; 
but the cost of producing a stone of wheat is very much 
greater than the cost of producing a stone of barley ; so 
much so that a farmer does not consider himself to be 
equally well paid if he does not obtain nearly half as 
much more for the former. Again, take another inter- 
pretation : does the doctrine mean that, taking the aver- 
age of considerable periods, the value of freely produced 
commodities will be constantly proportioned to the costs 
of producing them ? jS^either in this sense can the doc- 
trine bear strict examination. Cotton goods, e. g., in En- 
gland, and tobacco in America, are freely produced 
commodities. Any one who has the requisite means at 
liis disposal may engage in the production of either to 
any extent he pleases ; yet in the exchange of tobacco 
and manufactured cotton between America and En- 
gland, even taking the average of long periods, the pro- 
portions in which they exchange will not be found to 
correspond with their respective costs : the quantity of 
English manufactured cotton which will exchanire for a 
given quantity of American tobacco will, on an average, 
represent a greater cost. 

In what sense, then, is the statement true that cost of 
production regulates the value of freely produced com- 
modities ? The answer is, it is true hypothetically — in 
the absence of disturbing causes ; or, to express the same 
thing in a different form, the doctrine expresses not a 
matter of fact, but a tendency. Thus, to revert to my 

E 2 



106 THE LOGICAL METHOD OF 

former example, it is not true, as a matter of fact, tliat 
wheat and barley at present exchange in proportion to 
their respective costs of production ; for the quantity of 
wheat for which a given quantity of barley will ex- 
change represents the result of a greater expenditure of 
labor and abstinence ; but it is true that v/heat and bar- 
ley te7id to exchange in proportion to their costs of pro- 
duction ;' and the proof of this is that the present high 
price of barley, as compared with that of wheat, will 
lead to an increased growth of barley and a diminish- 
ed growth of wheat next season. It may be that the 
change in the comparative quantities produced will not 
be sufficient to bring their values into proportion with 
their costs, in which case a still further increase will 
take place in the growth of barley the following year, 
and a still further diminution in the growth of wheat ; 
or it may be that the change will exceed what is neces- 
sary, and that the value of barley as measured in wheat 
may fall below what its cost of production would re- 
quire; and in this case the process in the succeeding 
year will be reversed. But, whatever be the result, and 
however calculation may be defeated by the vicissitudes 
of the seasons and by other causes, the tendency of its 
value to approach the cost of its production will be con- 
stant and unfailing.'^ It is, to borrow Mr. Mill's illustra- 



' When the cost of producing agricultural produce is spoken of as de- 
termining its value, the reader will understand that I always speak of the 
cost of that portion which is raised at greatest expense. 

^ It is contended by Mr. Macleod(" Theory and Practice of Banking," 
vol. i. p. 1 3) that it is not the cost of production which regulates the value 
of agricultural produce, but the value which regulates the cost. It is, no 
doubt, true that in the case of agricultural produce a rise in its value, or 
(supposing the value of money to be constant) in its price, is generally fol- 



POLITICAL ECONOMY. iQ^ 

tion, like the tendency of the ocean to a level, which is 
as constant and certain as the law of gravitation, though 

lowed by an increased cost of production. On the other hand, a rise in 
the price of a manufactured article generally leads to a diminished cost ; 
and it would be just as reasonable to say that price regulates cost of pro- 
duction in one case as in the other. ^Vhat price really regulates is the 
quantity that shall be produced ; an advance in the price of an article be- 
yond its normal level always indicating that the supply is insufficient, and 
thus leading to increased production. Xow it so happens that, in the case 
of agricultural produce, the smaller the quantity required the less the pro- 
portional cost at which it can be obtained, it being the less necessary to 
resort to any but the most fertile soils ; and hence it arises that every ad- 
vance in price, leading to increased production, is followed generally by 
increased cost. On the other hand, in the case of manufactured articles, 
the larger the scale of production, the less generally the proportional cost, 
owing to the greater room thus aiforded for the use of machinery and the 
division of labor ; and, accordingh', the advance in price in this case, lead- 
ing also to extended production, is generally followed by a diminished 
cost. 

It is evident that in neither case is the cost regulated by the price, but 
by the quantity required, together with the physical and mechanical con- 
ditions under which the article is produced. On the other hand, it is cer- 
tain that, in both cases, cost is the regulator of price, since whatever be 
the cost at which the quantity required is produced — whether it be raised 
or lowered by the extended production — this cost is the point about which 
the price will permanently oscillate. 

Mr. Macleod says that the doctrine that cost of prodiwtion regulates 
value means "that a perseverance in producing any article at great ex- 
pense, if continued long enough, would in the end succeed in raising its 
value." Mr. Macleod, of course, means "continued long enough" at an 
unremunerating price (for if the price were remunerating, it would be in 
proportion to cost of production, and there would be no point in the argu- 
ment) ; but such a case is economically impossible. All Eicardo's rea- 
sonings — indeed, the reasonings of all economists that I have met with ex- 
cept Mr. Macleod — proceed upon the assumption that self-interest is the 
motive to production. A case, therefore, which supposes "a persever- 
ance in producing " without an adequate remuneration — that is to say, 
without an adequate motive — is simply out of the pale of Political 
Economy. Cost of production would not indeed, under the circumstances 
supposed, regulate value ; but no more would demand and supply, nor any 
other principle that can be imagined. " Value," in short, would no longer 
have any meaning, since exchange, with the feelings of self interest which 
dictate it, would cease to exist. 



108 '^^^ LOGICAL METHOD OF 

probably no single square yard of its surface may even 
for a moment actually attain it. In the example, how- 
ever, vp'hich I have given of the relative value of barley 
and wheat within the United Kingdom, though the pro- 
portions in which these two articles exchange may never 
at any given moment strictly conform to their costs of 
production, still, if the average were struck over an ex- 
tensive period, the correspondence would probably be 
found to be in most cases sufficiently accurate; just as 
the average elevation of a cork thrown on the surface of 
the ocean would be found to represent the level which 
the whole surface constantly tended to approach. But 
in the other example of the exchange of cotton goods 
and tobacco between England and America, this would 
not be the case. As I have already observed, if we 
were to take the average proportions in which these two 
articles are exchanged even over a considerable period, 
this average would not be found to correspond with 
their respective costs of production. 

Is it, then, true that the law fails in this instance? I 
answer that it no more fails than the law of gravitation 
fails when its force is neutralized by the action of fric- 
tion. The law operates, but its operation is controlled 
by the force of another principle which intervenes and 
modifies the resulting phenomena. The case affords an 
example of a statement which I made on a former occa- 
sion, that a law in Political Economy, though logically 
deduced from indubitable facts of nature, is yet, when 
applied to external phenomena, true only hypothetical- 
ly. Thus the law that cost of production regulates the 
value of freely produced commodities is a doctrine log- 
ically deduced from the unquestionable facts that men 



POLITICAL ECONOMY. 109 

desire physical well-being, and are averse to unrequited 
toil. Looking pimply to these principles, it clearly fol- 
lows that men desire to obtain wealth at the least pos- 
sible outlay of labor; and consequently that they will 
not continue to give an article, the production of which 
costs a given amount of labor, for an article which may 
be obtained on less onerous terms ; and this is only in 
other words to say that cost of production .regulates val- 
ue. But this is only true on the hypothesis that no 
other principle intervenes to disturb the direct operation 
of the two principles just described. For example, love 
of country may intervene to disturb their operation. 
An Englishman maj^prefer permanently to exchange a 
pound of manufactured cotton for a quantity of raw to- 
bacco which cosraless labor, rather than to go to Amer- 
ica to grow tobacco for himself. In international deal- 
ings, therefore, a new principle, love of country, comes 
into play, and modifies the action of the primary princi- 
ples from which the law of cost has been deduced ; the 
result is a deviation of international values from the 
course which the elementary law would lead us to ex- 
pect. To recur to the illustration just employed — let 
us suppose a weight to remain in equilibrium on an in- 
clined plane. ISTo one who understood the meaning of 
a physical law would say that there was here any fail- 
ure of the law of gravitation : the law does not fail, but 
is counteracted by the intervention of another force, 
friction. And similarly there is no failure of the law 
of cost of production, when in international trade fric- 
tion of another kind intervenes to modify the results of 
its operation. Diminish the friction of the plane in the 
physical example, and the weight will begin to descend 



110 THE LOGICAL METHOD OF 

in obedience to tlie law of gravitation. And, in precise- 
ly the same way, diminish the obstructions to intenaa- 
tional communication, diminish the force of internation- 
al prejudices, and the general laws of value will be 
found immediately to act, and international values will 
approach more nearly to the respective costs of produc- 
tion of the articles exchanged. 

From this conception of an economic law, as express- 
ing a hypothetical, not a positive, truth ; as rej^resenting, 
not what actually takes place, but what tends to, or 
would take place in the absence of disturbing causes, 
we can have no difficulty in perceiving the kind of 
proof on which such a law rests, and the hind of argu- 
ments, therefore, by which alone, if Questioned, it can 
be refuted. 

Not being an assertion respecting the order of eco- 
nomic phenomena, it can neither be established nor re- 
futed by an appeal to the records of such phenomena — 
that is to say, by statistical or documentary evidence 
bearing on the course of industrial or commercial af- 
fairs ; but, expressing a tendency deduced from certain 
principles of human nature as they operate imder cer- 
tain physical conditions, it can be established only by 
proving the existence of such principles and conditions, 
and showing that the tendency asserted follows as a 
necessary consequence from these data; or, if ques- 
tioned, can be refuted only by showing, either that the 
principles and conditions assumed do not exist, or that 
the tendency which the law affirms does not follow as a 
necessary consequence from this assumption. In eco- 
nomic reasonings, therefore, supposing the logical portion 
of the process to be sound, the appeal must in all cases 



POLITICAL ECONOMY. HI 

ultimately be to consciousness or to some external fact 
— to some mental or physical law. And this, in fact, 
has been the kind of proof by which all those principles 
of Political Economy that can be considered as received 
doctrines have been established, and the i^ne to which, 
in the works of its ablest cultivators, all controverted 
questions have been ultimately reduced. 

§ 3, The readei-s of the " Wealth of Nations " will re- 
member the passage near the opening of the work, in 
which the existence of the division of labor is traced to 
certain principles in human nature coming into opera- 
tion under the actual circumstances in which mankind 
are placed. Having referred to the means of persua- 
sion employed by the lower animals in order to gain the 
favor of those whose services they require, Adam Smith 
continues : 

" Man sometimes uses the same arts with his brethren ; 
and, when he has no otlier means of engaging them to act 
according to his inclinations, endeavors, by every servile 
and fawning attention, to obtain their good will. He has 
not time, however, to do this upon every occasion. In 
civilized society, he stands at all times in need of the co- 
operation and assistance of great multitudes, while liis 
whole life is scarce sufficient to gain tlie friendship of a 
few persons. In almost every other race of animals, each 
individual, when it is grown up to maturity, is entirely in- 
dependent, and in its natural state has occasion for the as- 
sistance of no other living creature ; but man has almost 
constant occasion for the help of liis bretliren, and it is in 
vain for him to expect it from their benevolence only. He 
will be more likely to prevail if he can interest their self- 
love in his favor, and show them that it is for their own 
advantage to do for liim what he requires of them. "Who- 



]^12 THE LOGICAL METHOD OF 

ever offers to another a bargain of any kind proposes to 
do this. Give me that which I want and you shall have 
this which you want, is the meaning of every such offer ; 
and it is in this manner that we obtain from one another 
the far greater part of those good offices w^hich we stand 
in need of." ' 

Similarly, it was by appealing to the principle of self- 
interest as it operates in commercial transactions, and to 
the physical properties of the precious metals. as porta- 
ble commodities, that the same writer overthrew the dog- 
mas of the mercantile system, and established the doc- 
trines of free trade: 

" No commodities," he tells ns, " regulate themselves 
more easily or more exactly according to the effectual 
demand than gold and silver ; because, on account of the 
small bulk and great value of those metals, no commodi- 
ties can be more easily transported from one place to an- 
other — from the places where they are cheap to those 
where they are dear." 

..." A country," he continues, " that has no mines of 
its own must undoubtedly draw its gold and silver from 
foreign countries, in the same manner as one that has no 
vineyards of its own must draw its wines. A country 
that has wherewithal to buy wine will always get the 
wine it has occasion for ; and a country that has where- 
withal to buy gold and silver Avill never be in want of 
those metals. They are to be bought for a certain price 
like other commodities, and as they are the price of all 
other commodities, so all other commodities are the price 
of those metals. We trust with perfect security that the 
freedom of trade, without any attention of government, 
will always supply us with the wine which we have oc- 
casion for; and we may trust with equal security that 

» "Wealth of Nations," McCulloch's ecL, 1850, p. 7. 



POLITICAL ECONOMY. 213 

it will always supply us with all the gold and silver 
which we can afford to purchase or to employ, either in 
circulating our commodities or in other uses :' 

the reason, tliongli not expressed, being clearly implied 
that the same self-interest which is sufficient to induce 
the wine producers in France and Spain to send ns their 
wines, will be sufficient also to induce the producers of 
gold and silver to send ns these metals, if, as in the 
former case, we are prepared to give them their value in 
return. 

Again, reasoning against another doctrine of the same 
school — that the regulation of trade by a system of 
duties and prohibitions was indispensable to the com- 
mercial prosperity of the country — Adam Smith thus 
argues : 

" This is to direct private people in Avhat manner they 
ought to employ their capitals, and must in almost all 
cases be either a useless or a hurtful regulation. If the 
produce of domestic can be bought there as cheap as that 
of foreign industry, the regulation is evidently useless. 
If it can not, it must generally be hurtful. It is the maxim 
of every prudent master of a family never to attempt to 
make at liome what it will cost him more to make than 
to buy. The tailor does not attempt to make his own 
shoes, but buys them of the shoemaker. The shoemaker 
does not attempt to make his own clothes, but employs 
a tailor. The farmer attempts to make neither the one 
nor the other, but employs those different artificers, . , , 
What is prudence in the conduct of a private family can 
scarce be folly in that of a great kingdom. If a foreign 
country can supply us with a commodity cheaper than 
we ourselves can make it, better buy it of them with some 

' "Wealth of Nations," IMcCnllocIi's ed., lS.-)0, p. 190. 



114 THE LOGICAL METHOD OF 

part of the produce of our own industry employed in a 
way in which we have some advantage. The general in- 
dustry of the country being always in proportion to the 
capital which employs it, will not thereby be diminished, 
no more than that of the above-mentioned artificers, but 
only left to find out the way in which it can be employed 
with the greatest advantage. It is certainly not employed 
to the greatest advantage when it is directed toward an 
object which it can buy cheaper than it can make. The 
value of its annual produce is certainly more or less di- 
minished when it is thus turned away from producing 
commodities evidently of more value than the commod- 
ity which it is directed to produce." ^ 

In all this reasoning, I need scarcely remark, the ap- 
peal tliroughout is to the principle of self-interest. Ke- 
strictions on trade, if not useless, are hurtful — are prej- 
udicial to the increase of national wealth, because in 
the operations of trade men naturally seek their own 
interest, and, consequently, if left to themselves will 
naturally employ their industry in that way in which 
they have some ads'antage ; the general industry of a 
country, therefore, will not be diminished by freedom 
of trade, but only be employed to most advantage — • 
which is to say, in other words, employed so as to pro- 
duce the greatest possible amount of wealth. 

It is true, Adam Smith afterward refers to historical 
facts, and adduces the cases of Spain and Portugal to 
show the prejudicial effect of the mercantile system on 
the trade of those countries. You will observe, how- 
ever, that when he lias recourse to history, it is always 
in illustration or confirmation ; he never makes it the 

* "Wealth of Nations," p. 200. 



POLITICAL ECONOMY. 115 

basis of his doctrines. He first lays the foundation 
deep in the principles of human nature and the phys- 
ical facts of the external world ; the subsequent refer- 
ence to historical events is merely in illustration of the 
mode in which the laws thus established operate. 

Take another example from one of our greatest eco- 
nomic discoverers. One of the most important discov- 
eries in Political Economy which has been made since 
the time of Adam Smith is the theory of foreign trade 
established by Ricardo. " Previous to this," as Mr. 
Mill observes, "the theory of foreign trade was an un- 
intelligible chaos." The discovery of Ricardo was brief- 
ly this — he showed that the circumstance which deter- 
mined an interchange of commodities between two na- 
tions was not, as had previously been supposed, a differ- 
ence in the absolute cost of producing the commodities 
exchanged, but a difference in the comj^arative cost. 
Corn and iron, e. g., might both be obtained at less cost 
in Sweden than in England, and yet no exchange of 
corn and iron would necessarily take place between 
Sweden and England ; but if the comparative costs 
of iron and corn were different in those two countries, 
the principles of self-interest would inevitably lead to 
an exchange. I have already quoted the passage' in 
which Ricardo, illustrating this position by a simple 
hypothesis, was enabled to establish it as a doctrine 
of economic science by a direct appeal to the motives 
which engage men in the production and exchange of 
wealth. 

So also, in discussing with M. Say the theory of rent, 

' Ante, p. 94, 



116 THE LOGICAL METHOD OF 

of profits, of taxation, the question is invariably reduced 
by Kicardo, either to some acknowledged principle of 
human action, or to some question of physical fact — 
to such issues, e. g., as the following : What is the pro- 
ductive capacity of the soil ? Is the ratio of returns to 
outlay, ceteris ^arilms, the same, or greater, or less, as 
the outlay is increased ? Does not the conduct of farm- 
ers in resorting to inferior soils prove it to be less? 
In the cultivation of land, therefore, is there not a point 
at which the returns pay the capital and labor employ- 
ed in cultivation, and no more ? Will not the self-in- 
terest of farmers lead them to push cultivation to this 
point ? Will not the same consideration prevent them 
from pushing it further ? Are there not soils of every 
possible degree of fertility ? Are there not some, there- 
fore, which will merely yield an average profit on the 
outlay, and no more? Will not the competition of farm- 
ers, each guided by considerations of individual self-in- 
terest, force up the rent of land till the returns merely 
leave them the average rate of profits on their capital ? 
Will not the same motive prevent them from raising it 
further ? Is not rent, therefore, determined by the dif- 
ference between the cost of that portion of agricultural 
produce which is raised at greatest expense and that 
which is raised at less ? Supposing a tax on raw prod- 
uce — the farmer will not pay the tax, for then he 
would not get the average profits, and rather than sub- 
mit to less his self-interest will lead him to withdraw 
his capital from the land. Will he evade the tax by 
contracting the area of cultivation and giving a lower 
rent ; or will the wants of consumers induce them to 
give a higher price rather than diminish their consump- 



POLITICAL ECONOMY'. 117 

tiou ? Will, therefore, the miinmnm rate of profit, nec- 
essary in order to secure the investment of the farmer's 
capital, be maintained by a fall in rent, or by a rise in 
price ? On the decision of such points are the laws of 
rent, of profits, of taxation, made to turn. 

These examples, which might be multiplied at pleas- 
ure, will suffice to show the kind of proof on which the 
great masters of Political Economy have rested their 
discoveries, and the hind of issues to which they have 
reduced their controversies. In every case, where the 
logical process of an opponent is admitted as correct, 
the appeal has ultimately been to some mental or phys- 
ical principle : their method has thus been strictly in 
conformity W'ith what the nature of an economic law, 
as I have described it, would require. 



LECTUEE y. 

OF TEE SOLUTION OF AN EGONOMIG PROBLEM, AND 

OF TEE DEOBEE OF PERFECTION OF 

WEICE IT IS SUSCEPTIBLE. 

§ 1. In treating in my last lecture of tlie method of 
inquiry proper to Political Economy, I was led to an ex- 
amination of the nature of the assertion contained in an 
economic law, and of the kind of proof needed for estab- 
lishing or refuting it. On these points I arrived at the 
following conclusions, viz., that an economic law express- 
es, not the order in which phenomena occur, but a tend- 
ency which they obey ; that, therefore, when applied to 
external events, it is trae only in the absence of disturb- 
ing causes, and consequently represents a hypothetical, 
not a positive truth ; that, being deduced by necessary 
consequence from certain mental and physical principles, 
it can be established only by establishing the existence of 
the principles assumed, and showing that by logical ne- 
cessity they involve the tendency asserted ; and refuted 
only by proving that the principles do not exist, or that 
the reasoning is unsound. In all these respects I en- 
deavored to show that the character of an economic I^yw 
is strictly analogous to that of those laws of physical 
nature which are obtained, or which may be obtained, by 
deduction from the ultimate principles of the sciences to 
which they belong. 



SOLUTION OF AN ECONOMIC PROBLEM. HQ 

So far, then, the analogy between a "law" as under- 
stood in Political Economy and a "law" as understood 
in the more advanced physical sciences holds good. In 
the present lecture I propose to call your attention to a 
circumstance in which this analogy fails, and to the con- 
sequences which result from this failure in the develoj)- 
ment of economic truth. In both departments of specu- 
lation alike a law of nature expresses a tendency con- 
stantly influencing phenomena ; but in the physical sci- 
ences the discovery of a law of nature is never consider- 
ed complete till, in addition to the general tendency, an 
exact numerical expression is found for the degree of 
force with which the tendency in question o^Derates. 

"It is the character," says Sir John Herschel,' "of all 
the higher laws of nature to assume the form of precise 
quantitative statement. Thus the law of gravitation, the 
most universal truth at whicli human reason has yet ar- 
rived, expresses not merely the general fact of the mutual 
attraction of all matter ; not merely the vague statement 
that the influence decreases as the distance increases, but 
the exact numerical rate at M'hich that decrease takes place; 
so that, when its amount is known at any one distance, it 
may be calculated exactly for any other. Thus, too, the 
laws of crystallography, which limit the forms assumed by 
natural substances, Avhen left to their own inherent powers 
of aggregation, to precise geometrical figures with fixed 
angles and proportions, have the same essential character 
of strict mathematical expression, without which no exact 
particular conclusions could ever be drawn from them." 

To give one example more, the use of the balance has 
brought chemistry into the category of those sciences 
the laws of which admit of quantitative statement. 

' '^'Xatural Pliilosophv," p. 123. 



120 SOLUTION OF AN ECONOMIC PROBLEM 

The chemist is consequently able, not merely to describe 
the general nature of the reaction which will take place 
between certain substances under known conditions, but 
can give beforehand a numerical statement of the exact 
proportions in which the several elements will unite in 
the resulting compound. 

This is a degree of perfection, however, which it does 
not seem possible that Political Economy, any more than 
jurisprudence, philology, or any of those branches of 
speculation which derive their premises from the prin- 
ciples of human nature, should ever attain/ For, al- 
though the general character of these principles may be 
ascertained, and although when stated with sufficient 
precision they may be made the basis of important de- 
ductions, yet they do not, from the nature of the case, 
admit of being weighed and measured like the elements 
and forces of the material world : they are therefore not 
susceptible of arithmetical or mathematical expression ; 
and hence it happens that, in speculating on results which 
depend on the positive or relative strength of such prin- 
ciples, perfect precision, numerical accuracy, is not at- 
tainable. Political Economy seems on this account nec- 
essarily excluded from the domain of exact science.''^ 



1 This remark might, perhaps, be extended to embrace the organic sci- 
ences in general. The laws of organic development, for example, express- 
ing general tendencies, are never formulated in other than general terms. 
See "Habit and Intelligence," by J. J. Murphy, vol. i. pp. 201, 202, 212, 

^ Mr. Macleod considers Monetary Science (which he appears to regard 
as commensurate or nearly so with Political Economy) as "an exact sci- 
ence." In the Introduction to his "Theory and Practice of Banking," 
Tol. ii. p. 25, he writes as folloAvs : " These principles then act with unerr- 
ing cei'tainty — they are universally true — human instinct is as certain, in- 
variable, and universal in its nature as the laws of motion — akd that is 

THE CIKCnjISTANCE WHICH EAISES MONETARY SCIENCE TO THE KANK OF 



NOT SUSCEPTIBLE OF EXACTNESS. 121 

This quality of economic doctrines will be made more 
clear by a few examples. 



AN EXACT OK INDUCTIVE SCIENCE. It is tliis wliich leiiders it possible 
to establish it upon as sure, solid, and imperishable a basis as mechan- 
ical science. Alone of all the political sciences its phenomena may be ex- 
pressed with the unerring certainty of the other laws of nature." (The 
capitals are the author's.) Mr. Macleod seems to confound an "exact" 
with a positive science. In order that a science be " exact," it is neces- 
sary, not only that its premises be " universal and invariable," but, further, 
tliat they be susceptible of precise quantitative statement. If IMr. Macleod 
can show that both these conditions are satisfied in the present instance — 
that the character of "human instinct" can be known, and also that its 
force can be measured, as the fijrce of gravitation — he will then have estab- 
lished a basis for an exact science of Political Economy. 

Mr. Jennings, in his "Natural Elements of rolilical Economy, "appears 
to take the same view. " Our instruments," he says, " though acting on 
and through the principles of human nature, are found to consist of me- 
tallic indices [money] related as parts and multiples, and not less capable 
of being made subservient to the processes of exact calculation than are the 
instruments of any purely physical act. The results of these principles 
when obsen-ed may be expressed in figures ; as may also th.e anticipated 
results of their future operation, or such relations as those of Quantity and 
Value, Value and Rate of Production, may be exhibited in the formuliB 
and analyzed by the different methods of Algebra and of Fluxions" (pp. 
2j9-260). 

There is no doubt that economic results, when they have happened, mny 
be expressed in figures ; but I apprehend something more than this is req- 
uisite to render a science "exact." Mr. Jennings indeed adds, "as mny 
also the anticipated results of their future operation ;" but the question is, 
Have we such data as will warrant us in accepting as trustworthy the re- 
sults thus obtained ? Will our calculations turn out, not merely general- 
ly, but "exactly" true? Instend of dealing in general terms, let us take 
a specific case — the determination of the price of corn — and consider what 
in this instance would be necessary in order to ariive at an " exact" residt. 
The following is taken from Tooke's "History of Prices :" " But, further, 
supposing that both the results of the harvest and the stock on hand were 
made known with sufficient approach to accuracy by government returns, 
there would yet remain the greatest uncertainty in the corn markets unless 
the probable extent of the supplies from abroad could be known. And, 
granting all these grounds for estimates of actual and forthcoming supplie;s 
to be -within the power of government to ascertain, there would be yet 
another influence on prices — and consequently a cause of fluctuation — 
namelv, the speculative views operating on the minds of both buyers and 

F 



122 SOLUTION OF AN ECONOMIC PROBLEM 

The decline of profits, as nations advance in wealth 
and numbers, is a circumstance which has long attracted 
the attention of economists. It has also been observed 
that, in the course of this progress, a minimum point is 
attained, beyond which profits do not further decline ; 

sellers in the contemplation of circumstances likely to affect the produce 
of the next ensuing harvest. From the time of sowing to that of gather- 
ing the wheat crop, the casualties of the weather exercise an influence on 
the markets, and thus cause fluctuations at critical periods of the season. 
Among the claims put forth for agricultural statistics, it has been required, 
as a part of the information insisted upon, that there should be periodical 
government returns of the appearance of the growing crops. 

" These, and other contingencies more or less important, are causes of 
fluctuation from uncertainty of supply. But assuming, for mere argu- 
ment sake, the statistics of supply to be perfect, there still remain the un- 
certainties of demand. 

"For the reasons which I have before stated, the variations of consump- 
tion are on a much smaller scale than those of supply ; but the demand on 
the markets may occasionally have a considerable temporary influence on 
prices, as in the case of the autumn of 1854, of the millers and bakers try- 
ing to get into stock, after having left themselves bare. There may like- 
Avise be a demand for Exportation to France or to other parts of the Conti- 
nent. How could any information from government have supplied the 
statistics of such a demand ? But adopting the extreme and extravagant 
hypothesis that all these elements of uncertainty admitted of having great 
light thrown upon them by statistics and other information published by 
government, there would still remain to be solved the problem of what the 
price ought in consequence to be ; and this, I will venture to say, will be 
found to be an insoluble problem. " — Vol. v. pp. 88, 89, 

In order that the problems of Political Economy should be made sub- 
servient to "exact" treatment, it would be necessary, not only that " the 
instruments, on and through which the principles of human nature [in the 
pursuit of wealth] act," should be capable of quantitative measurement, 
but also that the principles themselves, as well as the conditions under 
which they come into operation, should be susceptible of exact numerical 
statement. The most perfect system of weights and measures would never 
have made chemistry an exact science, if the law of equivalent proportions 
had not been discovered. 

Some forcible remarks in the same sense will be found in the "Philo- 
sophie Positive, " tome iv. pp. 512, 513. The attempt to employ mathemat- 
ical formnl33 in inquiries of the social order M. Comte regards as " Tinvo- 
lontaire te'raoignage dejisif d'une profonde impuissance philosophique." 



NOT SUSCEPTIBLE OF EXACTNESS. 123 

and, further, that this miuiranm is different in different 
nations. In China, it is stated that profits show no tend- 
ency to fall below 30 per cent, per annum; while in 
England profits have fallen perhaps to 10 per cent., in 
Holland probably lower, and in other countl-ies the de- 
cline has been arrested at other points. ISTow the pointy 
in the descent at which the fall is arrested — that is to 
say, the minimum rate of profit which can for any con- 
siderable time exist in any community — is determined 
by the strength of a principle which Mr. Mill has called 
" the effecti^•e desire of accumulation." This " effective 
desire of accumulation" is a general expression to de- 
note the degree in which a desire for wealth predomi- 
nates over those principles of human nature which ob- 
struct its operation — such as the love of ease, and the 
desire for immediate enjoyment. When a man emj^loys 
Iiis wealth as capital for the purpose of producing more 
wealth, he is induced to do this — to abstain from the 
present enjoyment of what he has accumulated, and to 
engage in the toils and anxieties 'of business — by the 
prospect of addiiig to the sura-total of his wealth the 
profit which is to be made by the productive employ- 
ment of it. If he had not this prospect of j^rofit, he 
would not employ his acquired M'ealth for j^rodnctive 
purposes at all. He would have no motive to do so. lie 
would either consume it as he had need for it ; or, if he 
wished to reserve some for consumption in future years, 
instead of adventuring it without prospect of profit in 
productive operations, he would convert it info money, 
and lay it by in some secure place, from which he could 
withdraw it as occasion required. IN'ow, since the pros- 
pect of profit is that which induces a man to ovei'come 



124 SOLUTION OF AN ECONOMIC PROBLEM 

liis natural iudolence and to repress bis desire for imme- 
diate enjoj^ment, it is evident that the minimum rate of 
profit which shall suffice for this purpose will depend on 
the relation in which the accumulative propensity in his 
nature stands to the principles which oppose it — that is 
,. to saj, to his love of ease and inclination toAvard imme- 
diate enjoj^ment. The stronger relatively be tlie former 
principle, the smaller will be the prospect of gain ade- 
quate to induce him to engage in the production of 
wealth — in other words, the lower may profits fall be- 
fore the decline will be arrested through the absence of 
sufficient motive. The 'case, then, stands thus : Owing to 
certain conditions incident to the character of produc- 
tive agents, there is a tendency in profits to decline as 
nations advance in wealth and po]3ulation ; there is also 
a point at which the fall is arrested, which point is de- 
termined by the strength of the effective desire of accu- 
mulation. All the knowledge we are capable of attain- 
ing on the subject resolves itself into the general fact — 
that such tendencies' exist, and that such results depend 
on such conditions ; but, as we have no means of ascer- 
taining the precise strength, positive or relative, of the 
principles on which the result depends — independently 
of the manner in which their operation is exhibited in 
particular cases — we are unable to say beforehand at 
what point they may be brought into equilibrium : that 
is to say, we are unable to say before trial what may be 
the minimum of profits which is possible in any given 
community. Contrast this with the precision attainable 
in physical science. When an astronomer speculates on 
the course of a comet through space, he does not content 
himself with stating the broad, fact that the meteor is 



NOT SUSCEPTIBLE OF EXACTNESS. 125 

under the influence of certain antagonistic forces — that 
it tends to fly off from the sun under the influence of 
the momentum with which it is carried, but that at a 
point in its career the force of gravity will overcome this 
momentum, and that at this point its course will be re- 
versed ; the astronomer not only tells us this, but tells 
us, further, the precise distance which the comet must 
travel before the force of gravity overcomes the mo- 
mentum with which it moves so as to arrest its outward 
course; and he is able to do so, because he not only 
knows, as a general fact, that those tendencies represent- 
ed by the laws of gravitation and motion exist, but also 
is able to obtain an exact numerical expression for the 
force with which each operates — a degree of precision 
which is not attainable in the determination of the prin- 
ciples of Political Economy. 

Take another example of the uncertainty which, ow- 
ing to this indeflniteness in the premises, attaches itself 
to the character of tlie conclusions of economic science. 

We know, as a general rule, that human beings will 
more readily dispense with the luxuries and vanities 
than with the necessaries of life ; and we may infer 
with certainty that, in the absence of disturbing causes, 
a diminution in the supply of the ordinary food of a 
country will be followed by a greater proportional rise 
in its price than a corresponding diminution in the sup- 
ply of an article of less imperative necessity — that a 
diminution, e. g., of one third in the supply of wheat will 
cause a greater rise in the price of wlieat than a propor- 
tional diminution in the supply of silk will produce on 
its price. Some writers, indeed, have attempted to go 
beyond this general statement, and have expressed in a 



126 SOLUTION OF AN ECONOMIC PROBLEM 

tabulated form the rise in tlie price of food which takes 
place in the event of certain assumed deficiencies in its 
quantity. Thus, according to the calculation of Greg- 
ory King, who lived in the latter end of the seventeenth 
century, a deficiency of one tenth in the ordinary supply 
of the staple food will cause a rise in its price to the ex- 
tent of three tenths above the ordinary rate ; a deficien- 
cy of two tenths a rise of eight tenths ; a deficiency of 
three tenths a rise of 1.6 ; and so on up to a deficiency 
of one half, which, it is calculated, will produce a rise in 
price equal to four-and-a-half times the ordinary rate.' 
If, however, we consider for a moment the causes on 
which a rise of price depends, and the circumstances 
which determine its extent, it will be evident that no re- 
liance can be placed on the accuracy of such calcula- 
tions; the conditions essential to such accuracy not be- 
ing susceptible of realization. 

The rise which occurs in the price of wheat in conse- 
quence of a deficiency in quantity will depend (the 
amount of the deficiency being given) on two conditions 



, * The folloiving is Gregory King's 


3 tahle ; 




Defect. 




Above the common rate. 


1 tenth ■>, 






r 3 tenths. 


2 tenths 






8 tenths. 


3 tenths : 


> raises the 


price -i 


1.6. 


4 tenths 






2.8. 


5 tenths^ 






U.5. 



On this Mr. Tooke remarks: "It is perhaps superfluous to add that 
no such strict rule can he deduced ; at the same time there is ground for 
supposing that the estimation is not very wide of the truth, from observa- 
tion of the repeated occurrence of the foct that the price of corn in En- 
gland has risen from 100 to 200 per cent, and upward, when the utmost 
computed deficiency of the crops has not been more than between one 
sixth and one third below an average, and when that deficiency has been 
relieved by foreign supplies." — "History of Prices," vol. i. p. 13. 



NOT SUSCEPTIBLE OF EXACTNESS. 127 

— Istj tlie disposition of the people among whom the de- 
ficiency takes place to sacrifice other gratifications which 
it may be in their power to command to the desire of 
obtaining the usual quantity of their accustomed nutri- 
ment ; and, 2d, the extent of the means at their disposal 
for obtaining other kinds of gratification — that is to say, 
tlieir general purchasing power. Now if we conld ob- 
tain an exact measure of this disposition, as well as of 
the means of giving effect to it at the command of con- 
sumers, and knew also the exact extent of the deficiency 
in the supply of wheat, we might then give a precise nu- 
merical statement of the rise of price which would take 
place under the assumed circumstances. But it is evi- 
dent that none of these conditions can be accurately ful- 
filled. Without dwelling upon the difiiculty of ascer- 
taining accurately the other data essential to the solution, 
namely, the extent of the purchasing power of a com- 
munity, and the mode of its distribution among different 
classes, it is evident that the disposition of people to sac- 
rifice one kind of gratification to another — to sacrifice 
vanity to comfort, or decency to hunger — is not suscep- 
tible of precise measurement, and can never, like the 
forces of physical nature, be brought within the limits 
of a formulated statement. 

This character of indefiniteness which belongs to tlie 
premises of Political Economy is very strikingly exhib- 
ited in the effect which an alteration in the duty on 
taxed articles sometimes produces on their consumption. 
It is often found, e. g., that a reduction in tlie duty on 
an article of consumption — say tobacco — is followed by 
an increase in the total proceeds of the tax, but that if 
the reduction be continued further, the returns will de- 



128 SOLUTION OF AN ECONOMIC PROBLEM 

cline. Now if the disposition and purchasing pov/er of 
the community with regard to tobacco, as compared 
with other articles of general consumption, were known, 
and could be accurately expressed by a mathematical 
formula, the precise point at which the proceeds of a 
tax upon tobacco would attain their maximum could be 
determined beforehand ; and an immense reform, with- 
out risk of failure, could at once be effected in our fiscal 
system. But as we have no means of ascertaining with 
precision the disposition of mankind, or any portion of 
them, in this respect, we are obliged to have recourse to 
a series of tentative experiments, and must content our- 
selves with a rough approximation to the required maxi- 
mum, obtained perhaps at the cost of considerable loss 
to the revenue and of inconvenience to the public. 

I have thought it well to call attention to this source 
of imperfection in our economic reasonings, as it appears 
to me desirable that we should know the w^eakness as 
well as the strength of our position as political econ- 
omists, that we may not, by affecting an accuracy that 
is unattainable, bring suspicion and discredit on the un- 
doubted truths of the science. 

The celebrated formula of Malthus, as you are aware, 
asserted that poj)ulation tends to increase in a geomet- 
rical, subsistence in an arithmetical ratio. In advancing 
this statement, Malthus really intended nothing more, 
as every candid and intelligent reader of bis work will 
at once perceive, than to give definiteness to our concep- 
tions of an important principle ; the conclusions which 
he based upon the principle thus expressed not in the 
least depending for their truth on the mathematical ac- 
curac}'- of the formula. Ilis opponents, however, were 



NOT SUSCEPTIBLE OF EXACTNESS. 129 

not in the humor for making this allowance. The doc- 
trine had been stated in mathematical form, and it must, 
therefore, he maintained in all its strictness, or the spec- 
ulations of Malthus must be forthwith pronounced a de- 
lusion, and his conclusions the phantasms of a diseased 
imagination. 

§ 2. Such, then, being the character of an economic 
law, analogous in all respects to those laws of physical 
nature which are obtained by a similar process of de- 
ductive reasoning, with the important exception that it 
does not admit of quantitative statement, we are now 
in a position to understand how far economic laws can 
be made available in the explanation of economic phe- 
nomena. 

The explanation of a phenomenon, or the solution of 
a problem (the expressions being equivalent), consists in 
a reference of the fact to be solved or explained to some 
known or acknowledged principles. The velocity of a 
planet through space, e. g.^ is said to be explained when 
this velocity is shown to be the result of known dynam- 
ical principles. Tlie physical phenomenon of dew is 
said to be explained when it is shown that tlie known 
laws of the radiation and conduction of heat, together 
with the laws of the condensation of watery vapor, neces- 
sarily under certain external conditions lead to the oc- 
currence of dew; these conditions being the same as 
those under which, in fact, dew is observed to appear. 
If we admit the existence of the laws, we see that the 
phenomenon must be present when, in fact, it is present. 
In the same way the economic phenomenon of rent is 
said to be explained when it is shown to be tlie neces- 

F2 



130 SOLUTION OF AN ECONOMIC PROBLEM 

saiy consequence of the play of human interests traffick- 
ing in an article having the peculiar physical properties 
Avhicli are found to reside in land. In this case, also, if 
we admit that human beings in their dealings with land 
act with a view to their own interests, and, further, that 
the best soils in point of fertility and situation are not 
unlimited in supply, and that the yield to be obtained 
from a limited area is also not unlimited, but diminishes 
in proportion to the outlay, as the quantity raised is in- 
creased, we see — or by reasoning on these facts we may 
see — that the phenomenon of rent must present itself in 
the progress of society, and that it will rise and fall 
from those causes which we find in fact to affect it. So 
far, the solution of an economic problem is strictly anal- 
ogous to that of a physical problem ; in each case the 
process consists in tracing back the fact to be explained 
to its source in the ultimate principles of the science ; 
if it be a physical fact, to the ultimate laws of physical 
nature ; if an economic fact, to the ultimate axioms of 
Political Economy — that is to say, to the mental and 
physical principles from which its doctrines are de- 
rived. Until this connection is clearly established, no 
physical or economic phenomenon can be said to be 
explained. 

The solution of a problem may be regarded as perfect 
when the principles to which it is referred are shown to 
exist, and to lead by necessary consequence to the pre- 
cise fact which constitutes the problem to be solved.* 



' "In such a case," says Sir John Herschel, "wlien we reason upward 
till we reach an ultimate fact, we regard a phenomenon as fully explained ; 
as we consider the branch of a tree to terminate when traced to its inser- 
tion in the trunk, or a twig to its junction in the branch ; or, rather, as a 



NOT SUSCEPTIBLE OF EXACTNESS. 131 

Supposing our reasoning to be correct, it is evident that 
imperfection may yet arise either from the iudefiniteness 
of our knowledge of the laws which operate in produc- 
ing the phenomenon, or from ignorance of the precise 
circumstances under which they come into operation. 
With the exception, perhaps, of astronomy, there is no 
science that has attained absolute perfection in both 
these respects. Most of the advanced physical sciences, 
however, satisfy the first condition, though tliey gener- 
ally fail of complete accuracy in the latter. To revert 
to a former example — the formation of dew — the laws 
of the radiation and conduction of heat and of the con- 
densation of watery vapor on which that phenomenon 
depends may be accurately ascertained and expressed 
in mathematical formulae ; but the circumstances under 
w^hich the phenomenon appears — the state of the atmos- 
phere, and the condition of the various bodies on which 
tlie deposition of dew takes place during any given 
night — can not be accurately ascertained. ISTow, while 
this is so, the solution of the problem is not complete ; 
since, although we may perceive from our knowledge of 
the laws of heat and of aqueous vapor that dew under 
the actual circumstances must appear, yet, from want of 
precision in our knowledge as to what the actual circum- 
stances are, we can not tell the precise quantity that 
ought, in obedience to these laws, to be deposited ; and, 
therefore, can not be certain that our solution may not 



rivulet retains its importance and its name till lost in some larger tributa- 
ry, or in the main river which delivers it to the ocean. This, however, 
always supposes that, on a reconsideration of the case, we see clearly how 
the admission of such a ftict, witli all its attendant laws, will perfectly ac- 
count for every par tlctilar." — " Natural Philosophy," p. 163. 



132 SOLUTION OF AN ECONOMIC PROBLEM 

be more or less than adequate ; nor wlietlier there may 
not be other causes affecting the result which we have 
omitted to notice. 

In Political Economy we have seen that the laws 
which it announces do not admit of precise quantitative 
statement: w^e have now further to note that the re- 
maining portion of the data necessary to the solution 
of a given problem, namely, the circumstances under 
which they come into operation, though generally sus- 
ceptible of measurement cquld they be ascertained, yet 
in practice can seldom be ascertained so completely as 
to admit of being stated numerically. 

Take, e. g., an economic phenomenon which has ex- 
cited much speculation lately among economists and 
commercial men — the export of silver from Europe to 
the East, which has been proceeding on an extraordina- 
ry scale during the last year (1856). Many causes may 
be assigned, which, taken together, will go a certain way 
in accounting for this fact."- There has been, in the first 
place, a general rise of wages in the United Kingdom — 
the consequence partly of our general commercial pros- 
perity, partly of the gold discoveries — leading to an in- 
creased money demand here for the productions of East- 
ern countries. There has been, in the next place, a fail- 
ure in the silk crop on the Continent, obliging Europeans 
to obtain a large portion of their silk from India and 
China, and thus mcreasing the liabilities of Europe in 
those quarters. The interruption of our trade during 
the Russian war, again, has obliged us to resort to the 
same quarters for linseed and other articles which we 
usually procure from Russian sources ; leading to a fur- 
ther augmentation of our liabilities in the East. There 



NOT SUSCEPTIBLE OF EXACTNESS. I33 

is then a Chinese rebellion, tending to increase the pas- 
sion for hoarding so prevalent in Oriental countries. In 
addition to all these causes, there are the new supplies 
of gold from California and Australia, lowering its value 
in relation to silver, displacing thereby the latter metal 
from the circulation of countries which have a double 
standard (such countries being principally confined to 
the continent of Europe), and thus, by lessening the de- 
mand for, lowering the value of, silver. Having regard 
to these different circumstances, and to the play of hu- 
man interests in the pursuit of wealth to which they 
give occasion, it may be easily shown that the export of 
silver from Europe to the East (unless counteracted by 
some other causes of equal efficacy in an opposite direc- 
tion) must take place as a necessary consequence ; and, 
taking them altogether, and the scale of their magni- 
tude as far as it can be ascertained, they probably go far 
to explain the existing drain. But are they adequate to 
a complete explanation ? or are they more than ade- 
quate? and is it, therefore, necessary to look out for 
some cause acting in an opposite direction, in order to a 
complete explanation of the result which we witness ? 

Or, take another example — the high price of corn 
during the last four 3'ears (1853 to 1856 inclusive). 
Among the causes which have been assigned in explana- 
tion of this phenomenon is the fall wdiich has recently 
taken place in the value of gold, the effect of the large 
influx from Australia and California. Some writers, 
however, who are of opinion that gold has not fallen in 
value, maintain that the high range of price is sufficient- 
ly accounted for by the shortness of supplies consequent 
upon the great deficiency of the harvest of 1853 over 



134: SOLUTION OF AN ECONOMIC PROBLEM 

the whole of Europe, in conjunction with our exclusion 
from some of the usual sources of supply during the 
Russian war ; and this notwithstanding the influence of 
free tra(Je operating powerfully in the opposite direc- 
tion. Now, if Political Economy were an exact science, 
this question could be at once determined by calculating 
the effect of the causes assigned, and comparing the re- 
sult of the calculation with the actual market price. 
But, for the reasons I have explained, such a calculation 
transcends its resources ; for even though it were possi- 
ble to obtain accurate and trustworthy statistics of the 
production and imjDortation of corn during the period 
in question, we should yet be unable to say what effect 
this would produce on price, from the essential indeii- 
niteness of the other premises involved in the problem 
— the relative strength of human desires, the extent of 
the means at the disposal of consumers, not to mention 
the yarious circumstances influencing opinion as to the 
prospects of the coming crop, such as the changes in the 
weather and the reports of the harvests from other 
countries.' We are, consequently, in arguing this ques- 
tion, obliged to have recourse to arguments of a proba- 
ble, and often of a conjectural nature, the conclusions 
from which must, of course, partake of the same merely 
probable and conjectural character, and can, therefore, 
never attain to that precise and definite form which dis- 
tinguishes the conclusions of physical science. 

§ 3. 1 have dwelt thus at some length on the char- 
acter -joi an economic problem, and the degree of per- 

* See Tooke's " History of Prices," vol. v. part i. sec. 20, in which the 
question is very fully and very satisfactorily discussed. 



NOT SUSCEPTIBLE OF EXACTNESS. 135 

fection of which its solution is susceptible, because it 
appears to me that, among those who in the public 
press and elsewhere engage in economic discussions, 
tliere are few who seem to have any clear conception 
of what it is which, in the investigation of the phenom- 
ena of wealth, Political Economy proposes to accom- 
plish. The following very just observations, taken from 
a paper in the Statistical Journal of October last by 
my immediate predecessor, Mr. "Walsh, on the export 
of silver to the East, will illustrate the confusion of 
ideas to which I have adverted : " There is a mode in 
which some persons deceive themselves into the belief 
that they are accounting for tliis phenomenon, which 
calls for our consideration. I have seen it put forward 
by persons signing themselves ' China Merchants,' ' East- " 
ern Merchants,' and the like — names which seem to 
claim authority for the bearers in a question relating 
to a trade with which they are conversant. They state 
what is occurring, and then imagine they have told us 
U'Jiy ,' while, in fact, all their labor ends in ,telling us 
silver is exported to the East, because silver is exported 
to tlie East. One announces (in a letter to the Econo- 
7nist, February 2, 1856) that the direct answer to the 
question as to the cause of the export of silver is that 
the metal presents just now the most lucrative branch 
of commerce ; and h.e rejects any speculations that aim 
at offering further explanation. The answer is quite 
correct, but as trifling as true. If the trade were not 
lucrative, no one would continue to carry it on ; but 
the question is, what makes it unusually lucrative ? and 
on that subject the writer does not inform us. Others 
wander into long descriptions of the macliinery by 



136 SOLUTION OF AN ECONO^IIC PROBLEM 

wliich the transmission of silver is effected — bills drawn 
on this place for debts due elsewhere ; and goods sent 
to one locality in return for what is transmitted to some 
other ; and finally flatter themselves they have told us 
why, when they have merely m^entioned how. Why is 
such a one crossing the ferry ? Because he is carried in 
the boat. But why did he get into the boat ? That is 
the question to be answered. And so, in like manner, it 
is no answer to the question v/hy silver is exported to 
the East, to state the channels and appliances by which 
it is transmitted. "What is really required to be known 
is not the machinery of transfer, but what set that ma- 
chinery in motion :" in other words, what those phys- 
ical facts or events are, which, in conjunction with the 
self-interest of men operating in the pursuit of wealth, 
produce the actual result — the drain of silver. 

Every one, I suppose, has met with antagonists who, 
when hard pressed with an economic difficulty, have 
taken refuge in the convenient maxim that " in the end 
things will find their level " — an explanation which 
does not leave upon the mind a very definite notion of 
the means by which the desiderated level is to be at- 
tained. A writer in the Examiner'^ turns to almost 
equal account the words " stimulate " and " absorb," 
making them available in the support of some very ex- 
traordinary doctrines. Among other paradoxes, this 
writer maintains that not only has gold not fallen in 
value in consequence of the recent discoveries, but that 
it has never fallen in consequence of former discover- 
ies ; and not only this, but that there is nothing in the 

' December 13, IS.'G. 



NOT SUSCEPTIBLE OF EXACTNESS. I37 

cheapened cost of producing gold wbicli tends to lower 
its value. Having assumed (in disregard of such sta- 
tistics as he gives) that the increased production of gold 
has hitherto had no effect npon prices, the writer thus 
proceeds to account for the fact : " The additional 
supply of the precious metals has stimulated the indus- 
try of the world, and in fact produced an amount of 
wealth, in representing which they have been them- 
selves, as it were, absorbed." Further on he says : 
"But the produce of Australian and Californian gold, 
as well as that of silver which has accompanied it,' 



' As if in compensation for the prevalent disposition to rest economic 
principles on statistical data, the writer in the Examiner reverses the 
process, and endeavors to deduce from economic principles (or what he 
takes for them) matters of fact which are capable of being proA^ed by 
statistical evidence. In this way, in the article from which I have 
quoted, he attempts to prove that the stock of silver in the world has, 
since the Australian and Californian discoveries, been increased by an 
amount equal to £118,750,000. The following is his argument : 

The increase of gold he takes during the last nine years as £125,000,000; 
but silver in relation to gold has during that interval risen only 5 per 
cent. ; therefore the stock of silver has increased by the same amount 
(viz., £125,000,000) vilnus 5 per cent., or £118,750,000 ; adding, in fur- 
ther explanation, that the rise in the price of silver would "act as a 
premium on its production." 

It is evident that the suppressed premise of this argument is, that the 
relative quantities of the two metals vary always directly as their values ; 
but on this assumption the increase in the stock of silver would be very 
much greater than the Examiner makes it out ; since, according to all 
estimates on the subject, the stock of silver in existence in 1848, when 
the Californian discoveries took place, was at least one half greater 
than that of gold. If, then, the correspondence in their values indicates 
a like correspondence in their relative quantities, instead of an addition 
of £118,750,000 to the stock of silver previously existing, we should 
have an addition of £178,125,000, or an average annual production of 
silver since 1848 of about £22,000,000. 

But, in the next place, the assumption of a constant connection between 
the quantity and the value of the precioifS metals is directly at variance 
with the doctrine which it is the object of the article to establish — name- 



138 SOLUTION OF AN ECONOMIC PROBLEM 

is likely to go on, and it may be asked if this must not 
in course of time produce depreciation. We think it 
certainly is not likely to do so. . . . On the contrary, 
it will surely be ahsorbed by increasing wealth and pop- 
ulation as fast as it is produced." 

It is strange that the obvious reduotio ad absurdum 
should not have restrained such speculations. The the- 
ory applies to every conceivable augmentation of gold. 



ly, that an increased production of gold has no tendency to affect its 
value. The writer starts by assuming that the value of silver must be 
regulated by its quantity, and then proceeds to prove that the quantity 
of gold can have no influence on its value. Gold, we are told, has not 
fallen in value, notwithstanding the increase in its quantity, and then 
it is argued that silver must have increased in quantity pari passu with 
gold, or else its value would not have fallen with the value of gold. 

Had the writer taken the trouble to refer to the statistics which are 
available on the subject, he would perhaps have seen reason to doubt 
the soundness of his economic views. If the reader will turn to the 
sixth volume of Tooke's "History of Prices," Appendix XXVI., he 
will find returns of the importation of silver from the various produc- 
ing countries during the last eight years, and estimates from these and 
other sources of the total annual production during the same time, in 
a compendious and convenient form. From these it appears that the 
annual production of silver, which, according to M. Chevalier's estimate, 
was £8,720,000 in 1848, will, in the opinion of Mr. Newmarch, based 
upon the statistics which he has given, have risen to about £12,000,000 
for the present year — being equivalent to an increase of about 37 per 
cent, on the previous annual supply ; the annual supply of gold during 
the same period having increased by about 300 per cent. 

There seems indeed every reason to suppose, from the focts stated by 
M. de Humboldt and M. Chevalier, in their treatises on the Production 
of tlie Precious Metals, respecting the silver mines in Mexico and Peru 
still unworked, as well as from the recent discoveries of quicksilver in 
California, cheapening as it will so considerably the cost of producing 
silver, that the production of silver will be rapidly extended, and that 
thus the depreciation now going forward in the value of gold will be 
concealed by the contemporaneous depreciation in the value of that met- 
al with which it is most usual to compare it. As to the rise in the price 
of silver " acting as a premium on its production," this is merely the com- 
mon fallacy of confounding price and value. 



NOT SUSCEPTIBLE OF EXACTNESS. I39 

The stimulus is represented as in proportion to tlie in- 
crease of supply. Consequently, however great the in- 
crease, in the same degree will be the stimulus — in the 
same degree, therefore, the amount of wealth produced, 
and, as in representing this the gold is absorbed, in the 
same degree the absorption. According to this theory, 
then, if gold were produced in such quantities as to be 
as abundant as coj)per — nay, if it were as common as 
the sand on the sea-shore, it would nevertheless be as 
valuable as ever, and a given quantity of gold would 
still command the same quantity of all other things. 

It is to be regretted that the writer did not favor us 
with his notion of the manner in which the alleged 
"stimulus" to industry operates, and the suj^posed "ab- 
sorption " is effected. The stimulus, it seems, is not 
felt, according to the popular view, in a rise of price ; 
for this, he asserts, the new gold has no tendency to 
produce : nor does it take place through an increase 
of demand, for this could only manifest itself througli 
a rise of price ; nor does it operate through a fall in 
the rate of interest, for it is notorious that during re- 
cent years the rate of interest has been high ; while, 
with regai'd to the modus ojperandi of "absorption," 
we are equally left in ignorance.' 

» As another example of the kind of "solutions" with which writers 
on economic questions satisfy themselves, take the following from the 
Economist^ June 20th, 1857, p. 082. The writer is explaining the prin- 
ciples which regulate the distribution of the precious metals: "From 
the beginning of society, and in all countries, gold and silver have been 
used as money. They are, in fact, by some writers called natural money. 
If this be a true description of them, they must be distributed by natural 
laws, and one nation can not have more of them than another, any more 
than one man can have more atmospherical air than another. Europe, 
generally, is in a state of civilization which makes gold the most conven- 



140 SOLUTION OF AN ECONOMIC PROBLEM 

Such attempts at an explanation of economic phe- 
nomena remind iis of some of the physical speculations 

ient metal for its coin ; Asia, generally, is in a state of civilization which 
makes silver the most convenient metal for its coin. Europe can not pos- 
sibly have all the gold and all the silver too. Gluttonous as it may be — 
led -astray as its inhabitants still may be by the old theories of wealth — 
the desire to keep for itself all the gold and silver that Providence sends 
for all the nations of the earth can not possibly be gratified ; and so we 
see the large new supplies of the precious metals pretty fairly distributed 
over all. Gold comes from America and Australia into Europe ; and 
silvei-, displaced by it, goes from Europe to Asia, to India and China, 
spreading natural money every where. So, by the bounty of Providence, 
the useful instruments of life in society are distributed by two streams 
running in different directions over all the earth. Man is the agent for 
making the distribution, but he is not conscious of all the effects he pro- 
duces." 

Observe the reasoning in this passage : Gold and silver have in all 
countries been used as money ; they have been called natural money ; 
therefore (assuming the designation as correct, which the writer does) they 
must be distributed by natural laws ; and therefore one nation can not 
have more of them than another. Now, in the first place, whether gold 
and silver be distributed according to "natural laws," can not in the least 
depend upon whether they have been properly called "natural money." 
Paper credit, e. g., has never been called "natural money," nevertheless 
it is governed by natural laws as certainly as gold and silver ; if it were 
not so, the attempt to regulate the paper currency would be an absurdity. 
It is only i^ so far as things are governed by natural laws known to us — 
that is to say, it is only in so far as we know that certain effects will fol- 
low from certain causes — that we can hope to control them. 

But, secondly, it is argued that, because gold and silver are distributed 
by natural laws, therefore "one nation can not have more of them than 
another, any more than one man can have more atmospherical air than 
another." In the first place, it is not easy to see what the connection is 
between "natural laws" and equal distribution of the commodities which 
are subject to these laws ; but, secondh^, it is not true that one nation has 
no more of the precious metals than another ; indeed, it is so palpably un- 
true, that it is scarcely possible to believe that the writer could have meant 
what he so distinctly asserts. What, then, does he mean by saying that 
one nation can, not have more of the precious metals than another? Does 
he mean that the share of each is in proportion to its population ? or in 
proportion to its trade ? In neither of these senses is the doctrine more 
true than in the former. The trade of England is i-AX greater than that 
of France, but the quantity of the precious metals in France is greater 



NOT SUSCEPTIBLE OF EXACTNESS. 141 

of the schoolmen. Dr. "Whewell mentions a doctrine 
maintained by these philosophers tliat a yessel full of 
ashes would contain as much water as an empty vessel. 



tlian in England ; and the quantity in India, in proportion to its trade, is 
immeasurably greater than in either England or France. Neither is the 
relation of the precious metals to population more constant than in their 
relation to trade. Will it be said that what is intended is that the pre- 
cious metals are distributed among the difi'erent nations of the world in 
projiortion to their requirements for them? This is true; but to give this 
as an explanation of the principle according to which the distribution 
takes place is to show that the writer does not understand in what con- 
foists the solution of an economic problem. To adopt his own illustration, 
it is just as if a person, when asked according to what principle the air is 
distributed around the globe, should reply, according to the degree of press- 
ure operating upon- it. What we want to know is, in the one case, ivhat 
the conditions are which produce the pressure on which the dispersion of 
the atmosphere depends ; and, in the other, what those requirements are 
which determine the distribution of the precious metals — we want to know, 
in short, what principles of human nature they are which, operating upon 
what external facts, piHaduce the result which we see. 

So far with regard to the precious metals generally ; next, with regard 
to the metals severally, M'e are told that silver goes to Asia, while gold 
remains in Europe, because "Europe is in a state of civilization which 
makes gold the most convenient metal for its coin, while Asia is in a 
state of civilization which makes silver the most convenient metal for its 
coin." Now it is certain that no important change has taken place in the 
relative civilization of Europe and Asia, and I may add, of America, dur- 
ing the last ten years. If the principle, then, were a good one, silver would 
have been displaced in Europe long ago; and inasmuch as "the civiliza- 
tion" of America has been equally in advance of Oriental nations, silver 
would never have been the chief currency there. But silver has been the 
principal currency in both France and America until recently, and might 
be so still in spite of their "civilization," were their mint regulations 
framed with a view to retaining it. 

Had the writer of this passage a clear conception of what it is which 
Political Economy proposes to accomplish, the tracing of the phenomena 
of wealth up to definite human motives and ascertained external facts, he 
would scarcely have satisfied himself with such an explanation as I have 
quoted — an explanation whicli, in the vagueness of its phraseology and 
tlie looseness of its reasoning, is much more allied to the puerile conceits 
and verbal quibbles of the schoolmen, than to the rigor and precision of 
thought which modern science demands. 



142 SOLUTION OF AN ECONOMIC PROBLEM. 

The mysterions capacity of " absorption," which in this 
case was attributed to the ashes, is by the political econ- 
omist of the Examiner attributed to wealth and popu- 
lation. 

Whether in Political Economy or in physical science, 
before proceeding to account for a phenomenon, it is 
well to ascertain the fact of its existence. This prelim- 
inary point being settled, the problem is to be solved, 
not by vague phrases and wholesale assumptions, but by 
connecting the phenomenon to be accounted for with 
the ultimate principles of the science to which it be- 
longs ; and, in the case of Political Economy, these are 
certain known propensities of human nature and certain 
ascertained facts of the external world. 



LECTUEE VI. 

OF THE PLACE AND PUBPOSE OF DEFINITION IN 
POLITICAL ECONOMY. 

§ 1. The present will be a convenient occasion on 
wliicli to offer some remarks on the place and purpose 
of Definition in Political Economy. In it, as in all sci- 
entific undertakings comprising in their purview facts 
and objects of much variety, an arrangement of such 
facts and objects in classes according to the relations 
and afiinities which, estimated with reference to the 
ends of the particular inquiry, happen to be most im- 
portant, forms an indispensable help in the task of in- 
vestigation ; and, the phenomena having beeii classed, 
the separate groups need to bo marked by distinct 
names. In these two operations consists the process of 
defining in positive science. Of the two, it need scarce- 
ly be said, the former, classification, is incomparably the 
more important, as it is also verj^ much the more difficult 
operation. As has just been intimated, the problem it 
involves is to arrange the phenomena comprised in the 
particular investigation according to the relations and 
affinities most important with reference to the purpose 
in hand. A difficulty, however, meets us here at the 
threshold. For, in order to do this, a knowledge. of such 
relations and affinities, and of their comparative impor- 
tance in the inquiry, is plainly indispensable. But this 



144 THE PLACE AND PURPOSE 

is just what a student of nature — it matters not what 
may be the department of inquiry — can not possibly at 
the outset of his enterprise possess. What, then, is to be 
done ? Simply what the circumstances of the case pre- 
scribe — adopt some rough" provisional arrangement such 
as, regard being had to the end and purpose of the in- 
quiry, the superficial appearances of things suggest ; and 
then, as in the course of investigation new relations are 
brought to light and more important distinctions dis- 
close themselves, employ the larger knowledge thus ob- 
tained to correct and amend the original draught. These 
being the necessary conditions under which every new 
inquiry must be conducted, it follows that classification, 
except by the merest accident, can not in the early stages 
of a positive science be otherwise than extremely imper- 
fect ; and, secondly, that the students of such a science 
must be prepared for the necessity of constantly modify- 
ing their classifications and, by consequence, their defi- 
nitions with the advance of their knowledge, in order to 
bring them into correspondence M'ith the larger views 
and more exact ideas which this advance involves; nor 
can they ever be sure that their arrangements are defin- 
itive, so long at least as their science stops short of abso- 
lute perfection. 

§ 2, " ISTomenclature, in a systematic point of view," says 
Sir John Herschel (pp. 138, 139)," is as much, perhaps more, 
a consequence than a cause of extended knowledge. Any 
one may give an arbitrary name to a thing, merely to be 
able to talk of it; but to give a name which ghall at once 
refer it to a place in a system, we must know its propei'- 
ties; and we must have a system large enough and reg- 
ular enough to receive it in a place Avhich belongs to it, 
and to no other. It appears, therefore, doubtful whether 



OF DEFINITIOX. 145 

it is desirable, for the essential purposes of science, that 
extreme refinement in systematic nomenclature should be 
insisted on. "Were science perfect, indeed, systems of clas- 
sification might be agreed on, which should assign to ev- 
ery object in nature a place in some class, to which it more 
remarkably and pre-eminently belonged than to any other, 
and under which it might acquire a name, never afterward 
subject to change. But, so long as this is not the case, 
and new relations are daily discovered, we must be very 
cautious how we insist strongly on the establishment and 
extension of classes Avhich have in them any thing artifi- 
cial as a basis of a rigid nomenclature ; and especially how 
we mistake the means for the end, and sacrifice conven- 
ience and distinctness to a rage for arrangement." 

ISTow all this is quite as applicable to Political Econ- 
omy as to any physical science. The first inquirers into 
the laws of the production and distribution of wealth 
could not know at the outset of their inquiries what ar- 
rangement of the facts and objects forming the subject- 
matter of tlieir problem would best conduce toward its 
solution. Tliey could only therefore adopt that arrange- 
ment which was at the moment most promising, and this, 
previous to tlie scientific investigation of the phenom- 
ena, would naturally be tlie very classifications which 
popular discussions on political and social affairs had 
rendered familiar. But as investigation proceeded, and 
the more fundamental relations of things under their 
economical aspect were brought to light, the necessity 
for new arrangements of the phenomena, and a corre- 
sponding modification of economic language, would be- 
come apparent; and tluis economic terms would come 
to be employed in senses sometimes narrower, sometimes 
more extended, than the popular use. It is manifest 
from this that great elaboration of definitions, at all 

G 



146 THE PLACE AND PURPOSE 

events in the early stages of investigation, is a mistake. 
It is not only for the most part labor thrown away, as 
-subsequent inquiry will in all probability furnish rea- 
sons for largely modifying the earlier classifications, 
however carefully drawn up ; but, as Sir John Herschel 
intimates has happened in physical science, it may even 
act as a positive hinderance to the progress of knowledge 
by giving an artificial rigidity to nomenclature at a time 
when it is most important that it should be flexible and 
elastic. It will accordingly be found that the writers 
who have done most for Political Economy in its ear- 
ly stages have troubled themselves but little with defi- 
nitions. The number of definitions, for example, to 
be found in the economical writings of Turgot, Adam 
Smith, and Eicardo, might be counted on the fingers. 
This, however, is no argument against the gradual intro- 
duction of a scientific nomenclature into this science as 
the progress of our knowledge reveals the necessity of 
taking note of conditions naturally enough overlooked 
in the first essays at interpretation. Such a nomenclat- 
ure serves a double purpose : it becomes a record of the 
degree of progress actually achieved, and it supplies a 
frame-work or scaffolding from which the builders may 
carry up the structure to higher elevations. I say a " scaf- 
folding," because it must ever be borne in mind that in 
Political Economy, as in all the positive sciences, classifi- 
cation, definition, nomenclature, is scaffolding and not 
foundation — consequently a part of the work which we 
must always be prepared to modify or cast aside so soon 
as it is found to interfere with the progress of the build- 
ing. 

I remarked just now that Ricardo has given few defi- 



OF DEFINITION. 147 

iiitioiis, but undoubtedly he carried the science to a point 
at which definitions became urgently needed. This want 
his successors have attempted to supply, not always, I 
think, with a just apprehension of what the aim of defi- 
nition in a progressive science should be. I am far from 
thinking that Political Economy has yet reached a stage 
at which a complete nomenclature — a nomenclature mak- 
ing any pretensions to being definitive — could be con- 
structed, or that it would be wise to make the attempt ; 
but perhaps we have attained a point at which some pre- 
cision may be usefully essa3'ed in giving shape to its 
more fundamental conceptions. Even here, however, it 
must be admitted, the science is far yet from having 
spoken its last word ; and consequently even here our 
definitions must still be taken as provisional only — as 
liable to be modified, or, it may be, entirely set aside, as 
the exigencies of advancing knowledge may prescribe. 

§ 3. In connection with the subject of classification, a 
further remark must be made. In controversies about 
definitions, nothing is more common than to meet objec- 
tions founded on the assumption that the attribute on 
which a definition turns ought to be one which does not 
admit of degrees. This being assumed, the objector 
goes on to show that the facts or objects placed within 
the boundary-line of some definition to which exception 
is taken, can not in their extreme instances be clearly 
discriminated from those which lie without. Some equiv- 
ocal example is then taken, and the f ramer of the defini- 
tion is challenged to say in which category it is to be 
placed. Now it seems to me that an objection of this 
kind ignores the inevitable conditions under which a 



14:8 ^^^ PLACE AND PURPOSE 

scientific nomenclature is constructed alike in Political 
Economy and in all the positive sciences. In sucli sci- 
ences nomenclature, and therefore definition, is based 
upon classification, and to admit of degrees is the char- 
acter of all natural facts. As has been said, there are 
no hard lines in nature. Between the animal and vege- 
table kingdoms, for example, where is the line -to be 
drawn ? Vegetables only, it is true, decompose carbonic 
acid, but then all vegetables (e. g., the fungi, which ob- 
tain their carbon by feeding on other vegetables, and 
some parasitic plants) do not do so. Some vegetables 
have motor-action like animals ; and, again, the lowest 
classes of animals have no muscles or nerves. " If, then," 
s&js, Mr. Murphy, " vegetables have motor-actions like 
animals, and if there are whole tribes of vegetables 
which, like animals, do not decompose carbonic acid, and 
if the lowest class of animals have no muscles or nerves, 
what is the distinction between the kingdoms ? I reply 
that I do not believe there is any absolute or certain dis- 
tinction whatever." ' External objects and events shade 
off into each other by imperceptible differences, and con- 
sequently definitions whose aim it is to classify such ob- 
jects and events must of necessity be founded on circum- 
stances partaking of this character. The objection pro- 
ceeds on the assumption that groups exist in nature as 
clearly discriminated from each other as are the mental 
ideas formulated by our definitions ; so that, where a 
definition is sound, the boundary of the definition will 
have its counterpart in external facts. But this is an il- 
lusion. No such clearly cut divisions exist in the actual 

' " Habit and Intelligence," by J. J. Slurpby, vol. i. p. 165. 



OF DEFINITION. 140 

universe ; and if we feign them in our classifications, we 
should bear in mind that they are, after all, but fictions 
— contrivances called for, indeed, and rendered necessa- 
ry by the weakness of the human intellect, which is un- 
able to contemplate and grasp nature as a whole, but 
having no counterpart in the reality of things. Let me 
not, however, be misunderstood. I say our classifications 
are fictions, but, if sound, they are fictions founded upon 
fact. The distinctions, formulated in the definition of 
the class, have a real existence, though the facts or ob- 
jects lying on each side of the line, and embodying the 
distinguished attributes, fade into each other by imper- 
ceptible degrees. The element of fiction lies, not in the 
qualities attributed to the things defined, but in the sup- 
position that the objects possessing these qualities are in 
nature clearly discriminated from those that are without 
them. It is, therefore, no valid objection to a classifica- 
tion, nor, consequently, to the definition founded upon it, 
that instances may l)e found which fall or seem to fall 
on our lines of demarkation. This is inevitable in the 
nature of things. But, this notwithstanding, the clas- 
sification (and therefore the definition) is a good one 
if, in those instances which do not fall on the line, the 
distinctions marked by the definition are such as it is 
important to mark — such that the recognition of them 
will help the inquirer forward toward the desiderated 
goal. 

§ 4. The other portion of the defining process is nam- 
ing, which, though less important than classification, is 
still far from being without serious bearing on the suc- 
cessful cultivation of positive knowledge. On this sub- 



150 THE PLACE AND PURPOSE 

ject the following weighty aphorism, laid down by Mr. 
Mill, deserves our consideration : 

"Whenever the nature of the subject permits our rea- 
soning processes to be, without danger, carried on mechan- 
ically, the language should be constructed on as mechan- 
ical i^rinciples as possible ; while, in the contrary case, it 
should be so constructed that there shall be the greatest 
possible obstacles to a merely mechanical use of it." ^ 

ISTow within which of the categories here indicated 
onght Political Economy, regard being had to the nature 
of its subject, to be considered as falling ? Within the 
category in which our reasoning processes may be car- 
ried on mechanically without danger, and in which, 
therefore, the language should be constructed on as me- 
chanical principles as possible ; or within that in which 
the language should be constructed on the opposite prin- 
ciple of preventing its employment, as far as possible, in 
a merely mechanical way ? I have no hesitation in say- 
ing that Political Economy belongs pre-eminently to the 
group of studies in which the reasoning processes can 
not be carried on mechanically without the gravest dan- 
ger, and in which, consequently, the rule laid down in 
the latter portion of the aphorism just quoted for the 
construction of a nomenclature ought to be observed. 
The subject has been discussed by Mr. Mill in its widest 
bearings in his chapter on the requisites of a philosoph- 
ical language,^ and need not therefore be entered into 
here at any length. But if any one doubt the sound- 
ness of this position, I would ask him to reflect upon the 
mental processes by which economic truths are estab- 

* "Logic," book iv. chap. vi. § 6. = Ibid., book iv. chap. vi. 



OF DEFINITION. 151 

lished. Let liim follow the course of proof in any act- 
ual case, and I think he will find that, in order to the 
right conduct of the ratiocination, by much the most im- 
portant condition is that in each step of the argument 
the reasoner should keep as fully as possible before him 
the actual concrete circumstances denoted by the terms 
he employs. I think he will find that it is mainly in 
proportion as this has been done that economic reason- 
ing has issued in results of any real value, while to the 
failure to satisfy this condition may be traced no small 
proportion of the errors which have marked the course 
of economic research. I hold, therefore, that it is of the 
utmost importance, not only in Political Economy, but in 
all social investigation, that the terms of our nomenclat- 
ure should, as far as possible, serve as constant remind- 
ers of the nature of the concrete objects which they are 
employed to denote ; and that for this purpose, to bor- 
row Mr. Mill's language, "as much meaning as possible 
should be thrown into the formation" of our economic 
terms, " the aids of derivation and analogy being em- 
ployed to keep alive a consciousness of all that is signi- 
fied by them." 

It will serve to throw light at once on the resources 
at the disposal of the economist in this respect, and also 
on the special difficulties under which Political Econo- 
my labors in the matter of definition, if we advert for 
a moment to the case of the physical science which 
offers the most perfect example of a nomenclature 
framed on the principle we have now in view. This 
is chemistry, in which the nomenclature is at once 
significant and technical — significant, inasmuch as its 
terms are composed of elements taken either from ex- 



152 THE PLACE AND PURPOSE 

isting or from ancient languages which carry their orig- 
inal meaning into their new occupation ; and tech- 
nical, inasmucli as in their actual form they are only 
employed as members of a scientific nomenclature. 
Such words as oxygen, hydrogen, carbonate of lime, 
peroxide of iron, are all full of meaning, but are never 
employed except to express certain known chemical 
elements or combinations. From this union of the two 
qualities of significance and technicality in its nomen- 
clature an immense advantage results for chemical sci- 
ence ; since its terms have in consequence the power 
of calling up with great distinctness the concrete ob- 
jects they are intended to denote ; while, having been 
constructed for the special purpose of designating those 
objects, and never being employed in common speech, 
they are free from all associations which could confuse 
or mislead either those who employ or those who hear 
them. The point, then, to be considered is how far it 
is possible to construct for Political Economy a nomen- 
clature which shall fulfill the same ends as nomenclat- 
ure in chemistry. It appears to me that a certain ap- 
proximation toward this result is feasible, but only an 
aj)proximation ; and that, after all is done, the technical 
language of Political Economy must ever fail vastly 
short of the perfection attained by terminology in 
chemical science. In coming to this conclusion, I as- 
sume it as settled that the technical terms of Political 
Economy are to be taken from popular language, and 
this, not merely as regards their elements, as is done 
in chemistry, but, so to speak, bodily in their complete 
forms. Whether it would, at any time, have been pos- 
sible to have constructed an economic nomenclature on 



OF DEFINITION. I53 

the plan adopted in chemistry is perhaps scarcely worth 
considering. The science has, in fact, been developed 
through the instrumentality of popular language. It is 
through this medium that the ideas of all its greatest 
thinkers have been put forth ; it is in this clothing that 
the world is familiar with them ; and it is, therefore, 
now palpably too late, even if there were no other re- 
straining consideration, to think of recasting its doc- 
trines in other forms. Such words as production, dis- 
tribution, exchange, value, cost, labor, abstinence, capital, 
profit, interest, wages, must now for good or for evil re- 
main portions of economic nomenclature ; and these 
have all been drawn in their actual forms from the 
vernacular, and are in constant use in popular speech. 
With regard to such words, tliey are capable enough of 
fulfilling the first of the two functions fulfilled by no- 
menclature in chemistry — of calling up, that is to say 
— always supposing them to be used with deliberation 
— concrete facts and objects with sufiicient vividness. 
The hitch occurs in their inaptitude for the- second of 
the two purposes required of them, for bringing to the 
mind the exact facts and objects, neither more nor few- 
er, which we desire to indicate. 

For the position of things is this : The economist 
finds it necessary, for the reasons which have been 
stated above, to arrange the phenomena of wealth in 
classes on a certain principle — that principle being, in 
fact, the convenience of his own investigations ; and he 
has to find names for the classes thus constituted in the 
terms of popular language. But popular language has 
not been framed to suit the convenience of economic 
speculation, but with quite other views. Its distinctions 

G 2 



154 THE PLACE AND PURPOSE 

and classifications do not always or generally coincide 
with those which are most important for the elucida- 
tion of the economy of wealth ; and, even where this 
correspondence is tolerably close, a term in constant use 
in ordinary speech inevitably gathers round it a vague 
aroma of association, sure to suggest in particular con- 
texts ideas which have no proper connection with the 
purposes of scientific research, and w^hich therefore can 
not but act as hinderances to the reasoning process. 
That precision of meaning, accordingly, which is so con- 
spicuous in the nomenclature of chemistry, and in gen- 
eral of the physical sciences, is unattainable in Political 
Economy. Its nomenclature satisfies, indeed, the condi- 
tion of having plenty of meaning. With even greater 
vividness than the nomenclature of chemistry, it is capa- 
ble of calling up the concrete things denoted by its terms ; 
but for this advantage it pays the heavy price of loss of 
precision — of yagueness and uncertainty as to the prop- 
er limitation to be given to its most important words. 
The remedy, so far as remedy is possible, seems to be 
twofold : first, to keep our definitions of economic 
terms as close to the usages of common speech as the 
requirements of correct classification will allow. Terras 
must, indeed, now and then be strained to express 
meanings and to suffer limitations which in ordinary 
discourse they do not express or bear, since otherwise 
the ends of classification would be sacrificed ; and it is, 
therefore, no conclusive objection to an economic defi- 
nition that it does not accurately coincide with popular 
use. But it should, nevertheless, be fully recognized 
that such deviations constitute a demerit in definition, 
and may become a serious one. The second remedy 



OF DEFINITION. I55 

against the evil is clearness and distinctness of defini- 
tion wherever terms of importance are emjDloyed ; care 
being taken, where the economic sense differs from the 
popular one, to bring into as strong relief as possible the 
points of difference ; with which precaution the prac- 
tice may be usefully combined of throwing in a caveat 
from time to time, where the context would be in dan- 
ger of suggesting the popular rather than the scientific 
sense. 

§ 5. "We may now sum up the general results of the 
foregoing discussion : 

1. The first requisite of a good definition in Political 
Economy is that it should mark those distinctions in 
facts and objects which it is important to mark with a 
view to the elucidation of the phenomena of wealth; 
and our nomenclature will be good or bad, helpful or 
obstructive, according as it coincides with such real and 
pertinent distinctions, or sets up others which are arbi- 
trary, fancif u], or irrelevant. 

2. So far as is consistent with satisfying the forego- 
ing condition, economic terms should be used as nearly 
as possible in their popular sense ; though, as strict ad- 
herence to popular usage is not compatible with fulfill- 
ing the requirements of sound classification, the mere 
circumstance of deviation from popular usage is no con- 
clusive objection to an economic definition. 

3. It is no valid objection to an economic definition 
that the attribute on which it turns is found to exhibit 
degrees in its concrete embodiments. This is inevitable 
from the nature of the case. 

4. Definitions in the present state of economic science 



156 TEE PLACE AND PURPOSE OF DEFINITION. 

sliould be regarded as provisional only, and may be ex- 
pected to need constant revision and modification with 
tlie progress of economic knowledge. Economic defi- 
nitions are thus progressive. A complete nomenclatm'e 
pretending to be definitive would at present be prema- 
ture, and, if framed and generally accepted, would prob- 
ably prove obstructive. But the time has come when 
increased precision may be usefully given to the more 
fundamental conceptions, alwa^'S with the understand- 
ing that tliese also must still be taken as provisional. 



LECTURE VIL 

OF THE MALTHUSIAN DOCTRINE OF POPULATION. 

§ 1. I ALLUDED in the opening lecture of tliis course to 
the present unsettled and unsatisfactory condition of Po- 
litical Economy with regard to some of its fundamental 
principles, attributing this state of things, as you will 
probably remember, to the loose and unscientific views 
which prevail respecting the character of economic doc- 
trines, and the kind of proof by which they are to be 
sustained or refuted. This led me in the succeeding: 
lectures to explain and illustrate at some length the 
character and method of the science. I now propose to 
vindicate the importance of the topics on which I have 
been insisting, by showing, in the instance of some fun- 
damental doctrines, the manner in which unscientific 
views regarding the nature and method 'of the science 
have operated in producing those differences of opinion 
to which I have referred. 

One of these doctrines, as I conceive quite funda- 
mental in the science of Political Economy, though im- 
pugned and controverted in several recent publications, 
is the doctrine of population as propounded by Malthus. 
It would of course be quite impossible, within the com- 
pass of a single lecture, to notice, much less satisfactori- 
ly to answer, all the various objections that have been in 
times past, or may still be, urged against this doctrine ; 



158 THE MALTHUSIAN DOCTRINE 

and it would be nnnecessary were it possible, most of 
them having received as full an answer as they deserve 
either from Malthus himself or from succeeding writers. 
I shall therefore confine myself to those which, either 
from their novelty, or from the circumstance that they 
have been lately indorsed by some economists of posi- 
tion, or from their logical character, will be most suit- 
able to the object which I have in view — the illustration 
of economic method. 

In order, however, that you should appreciate the force 
of these objections, it will be necessary for me to state 
tlie doctrine against which they have been advanced. 

The celebrated Malthusian doctrine is to the follow- 
ing effect, viz., that there is a " constant tendency in all 
animated life to increase beyond the nourishment pre- 
pared for it ;" or, with reference more particularly to 
the human race, that " population tends to increase faster 
than subsistence." From what I have already said of 
the character of an economic law, as well as from the 
terms of the proposition itself, yon will at once perceive 
that it is not here asserted that population in fact in- 
creases faster than subsistence : this would of course be 
physically impossible. You will also perceive that it is 
not inconsistent with this doctrine that subsistence should 
in fact be increased much faster than population. It 
may also, perhaps, be worth remarking that the doctrine, 
as it is stated by Malthus, is not invulnerable to verbal 
criticism. The sentence, "population tends to increase 
faster than subsistence," is elliptical, and the natural 
way of supplying the ellipsis would be by reading it 
thus : " Population tends to increase faster than subsist- 
ence tends to increase ;" but it can not with propriety be 



OF POPULATION. 150 

said that subsistence " tends to increase " at all. I men- 
tion this verbal inaccuracy, not because I think it is likely 
that arjy candid or intelligent reader could be misled by 
it, but because I have seen it dwelt upon by anti-Mal- 
thusian writers. But, waiving verbal cavils, what Mal- 
thus asserted, and what it is the object of his essay to 
prove, is this — that, regard being had to the powers and 
propensities in human nature on which the increase of the 
species depends, there is a constant tendency in human 
beings to multiply faster than, regard being had to the 
actual circumstances of the external world, and the power 
which man can exercise over the resources at his disposal, 
the means of subsistence are capable of being increased. 
The reasoning by which Malthus established this 
proposition was as follows: he had first to ascertain 
the capacity and disposition to increase inherent in man- 
kind — in other words, the natural strength of the princi- 
ple of population. ISTow, in order to discover the real 
character of any given principle, obviously the proper 
course is to consider that principle as it operates when 
unimpeded by principles of an opposite tendency. Mal- 
thus, accordingly, took an instance in which the external 
conditions were most favorable to the nncontrolled ac- 
tion of the principle of population. This was the case 
of new colonies, where a population with all the resour- 
ces of civilization at their command are brought into 
contact with a new and virgin soil. In these he found 
that population from internal som'ccs alone, and exclud- 
ing immigration, frequently doubled itself in twenty-five 
years.' This rate of increase was evidently not owing 

■ As a specimen of the intelligence exhibited in criticisms of Malthus, 
take the following from Blanqui's "Histoire de I'l^conomie Politique:" 



1(30 THE MALTHUSIAN DOCTRINE 

to any thing peculiar or abnormal in the physical or 
mental constitution of the inhabitants of such countries, 
but owins: to the favorable character of the external cir- 
cumstances under which the principle of population 
came into play. He therefore concluded that the ratio 
of increase, according to which population doubles itself 
in twenty-five years, represents the natural force of the 
principle — the rate at which population always tends to 
increase — the rate at which, if unrestrained by principles 
of an opposite character or by the physical incapacity of 
sustaining life, population always will increase. 

On the other hand, on looking to the means placed at 
man's disposal for obtaining subsistence, Malthus found 
that it was physically impossible that subsistence could 
be increased at this rate. The surface of the globe is 
limited; the portions of it suitable to cultivation and ac- 
cessible to human enterprise are still more limited ; and 
the difficulty of obtaining food from a limited area in- 
creases as the quantity raised from it is increased.^ If, 

"Le choix que Malthus a fait de TAmerique, oii la population double tous 
les vingt-cinq ans, n'est pas plus concluant que celui de la Suede, oii, se- 
lon M. Godwin, elle ne double que tons les cent ans. Les socictes ne pro- 
cedent point ainsi par periodes regulieres, comme les astres et les saisons, 
etc." Malthus could find his opponents in arguments, but not in brains. 

' Against this it is urged that, however true the statement may be as an 
abstract proposition, yet, regard being had to the actual state of the world 
— the increased supplies of food which even the most advanced countries 
under an improved agricultural system are capable of yielding, as well as 
the vast districts in America, New Zealand, and elsewhere, which are yet 
to be brought under cultivation — the doctrine must, for ages to come, be 
destitute of all practical significance. In a review of Mansfield's "Para- 
guay, Brazil, and the Platte," in Frasers Magazine (Nov., 1856), the 
writer, after rather more than the usual misrepresentation of Malthu- 
sian views, puts the objection thus : 

"Meanwhile stood by, laughing bitterly enough, the really practical 
men— men such as the author of the book now before us : the travelers, 



OF POPULATION 101 

€. g.j 40,000,000 quarter of corn are produced annually 
in the United Kingdom at present, it might be possible 



the geographers, the experimental men of science, who took the trouble, 
before deciding on what could be, to find out what was, and, as it were, 
' took stock ' of the earth and her capabilities before dogmatizing on the 
future fate of her inhabitants. And, ' What ?' they asked, in blank as- 
tonishment, ' what, in the name of maps and common-sense, means this 
loud squabble ? ^Yhat riglit has any one to dogmatize on the future of 
humanity while the far greater part of the globe is yet unredeemed from 
tlie wild beast and the wild hunter? If scientific agriculture be too cost- 
ly, is there not room enough on the earth for as much unscientific and 
cheap tillage as would support many times over her present population ? 
What matters it, save as a question of temporary make-shift, wliether En- 
gland can be made to give thirty-three bushels of wheat per acre instead 
of thirty-one, by some questionably remunerative outlay of capital, while 
the Texan squatter, without any capital save his own two hands, is grow- 
ing eighty bushels an acre? Your disquisitions about the "margin of 
productiveness " are interesting, curious, probably correct, valuable in old 
countries, but nowhere else. For is the question whether men shall live, 
or even be born at all, to be settled by them, forsooth, while the Valley of 
the Ottawa can grow corn enough to supply all England, the Valley of the 
Mississippi for all Europe ? — while Australia is a forest, instead of being, 
as it will be one day, the vineyard of the world ? — while New Zealand and 
the Falklands are still waste ; and Polynesia, which may become the 
Greece of the New World, is worse than waste ? — while Nebiaska alone is 
capable of supporting a population equal to France and Spain together? — 
while, in the Old World, Asia Minor, once the garden of old Rome, lies a 
desert in the foul and lazy hands of the Ottoman ? — while the tropics pro- 
duce almost spontaneously a hundred valuable articles of food, all but 
overlooked as yet in the exclusive cultivation of cotton and sugar? and, 
finally (asks Mr. Mansfield in his book), while South America alone con- 
tains a territory of some eight hundred millions of square miles, at least 
equaling Egy]3t in climate, and surpassing England in fertility ; easy of 
access ; provided, by means of its great rivers, with unrivaled natural 
means of communication, and "with water-power enough to turn all the 
mills in the world ;" and needing nothing but men to make it one of the 
gardens of the world ?' " 

There are travelers and travelers. The passage just quoted gives us 
the view of one class on the problem raised by IMalthus ; on the other 
hand,Von Humboldt, in his "Essay on New Spain" (vol. i. p. 107), char- 
acterizes the work of Malthus as "one of the most profound works on Po- 
litical Economy which has ever appeared." But to come to the reviewer's 
argument : 



1Q2 ^^^ MALTHUSIAN DOCTRINE 

at the end of twenty-five years, by means of improved 
agricultural processes, to raise 80,000,000 quarters annu- 

The objection, it will be observed, is a purely practical one. It is not 
denied that "population tends to increase faster than subsistence ;" that, 
however great be the quantity of food which the earth is capable of yield- 
ing, population may ultimately overtake it, and tends to do so ; but it is 
said, of what practical moment is this to us living now, with the boundless 
resources of new worlds still at our disposal? The answer — the practical 
answer — is, it is every thing to us, if these resources, however extensive, 
are not ni fact turned to account. It matters not whether the obstacles 
be physical or moral, whether absolute and insuperable or the result sim- 
ply of prejudice and ignorance, so long as they are effectual in preventing 
the cultivation of the countries iu question. So long as this is the case, 
these countries, to all practical intents and purposes, may be said not to 
exist for us : they can no more be counted on as means of supporting pop- 
ulation than the countries in the moon. Yet because, forsooth, " the Val- 
ley of the Ottawa can grow corn enough to support all England," although 
it is admitted that it does not do so, and it is not asserted that there is 
any immediate prospect that it will, this "really practical " reviewer holds 
that it is the height of absurdity to speak of the necessity of restraining 
population, and treats all those who do as dreamers and lunatics! 

A laborer, e. g., in Dorsetshire, on nine shillings a week is hesitating 
about marriage. The "speculative" Malthusian advises him to wait a 
little while till he saves enough to form at least the nucleus of a support 
for his wife and family. "The really practical man," on the other hand, 
says to him. Why hesitate ? Is not the Valley of the Ottawa capable of 
growing food for all England ? 

The immense food-producing capabilities of the earth yet available for 
us were not overlooked by Malthus, nor, so far as I know, have they been 
by those who accept his doctrine, nor is there any reason to suppose that 
either master or followers have underrated the importance of turning these 
capabilities to account. They have, however, urged that the existence 
of capabilities is no reason for weakening the restraints on population ; 
because, whatever be the extent of these resources, the development of 
them must be a work of time, and population is found in fact to be always 
fully able to keep pace with the process. The instinct which holds people 
to their native land, in spite of the alluring prospects of other regions, 
the tardiness with which capital moves to new countries, and the igno- 
rance, indolence, and barbarism of most of the races which occupy them, 
render the introduction of systematized industry into such regions a mat- 
tre of much difficulty and of slow accomplishment. The greater part of 
India has now been under English rule for a century, and yet we know how 
difficult it is to attract capital thither without a government guarantee ; 



OF POPULATION. KJo 

ally : it is perhaps conceivable that, by forcing to the 
highest degree every patch of cultivable land in the 
kingdom, at the end of fifty years 100,000,000 quarters 
might be raised : certain, however, it is that the annual 
production of corn in the United Kingdom could not go 
on forever at this rate ; but it is no less certain, in view 
of the capacity of increase in human beings, that the 
population of the United Kingdom could, and, in view 
of their natural propensities in the same direction, that 
they would, proceed at this rate forever, till brought to 
a stop by the physical impossibility of obtaining food — 
supposing, that is to say, that their natural power and 
disposition to multiply operated unchecked by princi- 
ples of an opposite character. 

The result, therefore, of the consideration of these 
facts by Malthus was the enunciation of the doctrine 

and, notwithstanding all that has been written and spoken of the hound- 
less resources of India, and the pressing needs of England for articles to 
the production of which her soil and climate are peculiarly suitable, how 
little has yet been done to turn these advantages to account ! What 
would a Manchester cotton-spinner think of the advice not to hesitate 
about erecting new mills and machinery, because, though the supply of 
cotton be rather short just now, the plains of the Deccan are capable of 
producing more than he will be aljle to woi'k up for half a century ? Yet 
the reviewer who, in the somewhat more momentous affair of human ex- 
istence, gives precisely analogous advice takes credit to himself for pre- 
eminent practical wisdom. 

With regard to the other point adverted to, the possibility of largely 
increasing the quantity of subsistence raised even in old countries, similar 
considerations apply. The fact is undoubtedly true ; but more food is 
nevertheless not raised. If it be asked why this is so, the answer is, 
because, while agricultural skill remains at its present point, an increased 
production of food would necessitate a fall in farmers' profits. And if it 
be further asked as to the grounds of this necessity, tlie inquirer may 
be referred to "the diminishing productiveness of the soil" — the im- 
penetrable barrier against which all anti-Malthusian plans and arguments 
jare ultimately shivered. 



1(54: THE MALTIIU8IAN DOCTRINE 

which I have just stated — that there is in human be- 
ings a tendency to multiply faster than subsistence ; to 
increase faster than subsistence is capable of being in- 
creased. Population, however, as I have said, whatever 
might be its tendency, could not increase faster than 
subsistence, inasmuch as human beings can not live 
without food ; and further investigation showed that 
subsistence in most countries, and in all improving 
countries, had in fact increased faster than population. 
Malthus therefore turned his attention to the discovery 
of those antagonizing principles which keep in check 
the natural power of population. These, he found, 
were reducible to two classes, which he designated the 
preventive and positive checks. The preventive checks 
included all causes which operated in restraining the 
natural power or disposition of mankind to increase 
their numbers, and were generally comprised nnder the 
two heads of prudence with regard to marriage, and 
vice, so far as it interfered with fecundity. The posi- 
tive checks included those causes of premature death 
incident to a redundant population, of which the prin- 
cipal were insufficient food, famine, disease, and war. 

§ 2. Such, in outline, is the doctrine of Malthus ; and 
such the line of reasoning by which it was established. 
As to its importance, it is scarcely too much to say that, 
while throwing a strong light on not a few of the dark- 
est passages of history, it in a short time revolutionized 
the current modes of thinking on social and industrial 
problems. The material well-being of a community 
mainly depends on the proportion which exists between 
the quantity of necessaries and comforts in that com- 



OF POPULATION. 1(J5 

muiiity and the number of persons among whom these 
are divided, of which necessaries and comforts by far 
the most important item is food. All plans, therefore, 
for improving the condition of the masses of mankind, 
in order to be effectual, must be directed to an altera- 
tion in this proportion, and, to be permanent, must aim 
at making this alteration permanent. Now, Malthns 
showed that the strength of the principle of population 
is such that, if allowed to operate unrestrained, no pos- 
sible increase of food could keep pace with it. It con- 
sequently followed that, in order to the permanent im- 
provement of the masses of mankind, the development 
of principles which should impose some restraint on the 
natural tendency of the principle of population was in- 
dispensable ; and that, however an increase in the pro- 
ductiveness of industry might for a time improve the 
condition of a community, yet this alone, if unaccom- 
panied by the formation of habits of self-control and 
providence on the part of the people themselves, could 
not be relied upon as an ultimate safeguard against dis- 
tress. 

The same discovery ' of Malthus — in his own lan- 

• I say " discoveiy," because, altliougli it is true that the fundamental 
fact on which MaUhus's doctrine rested had frequently been noticed be- 
fore {vide, for example, McPherson's "Annals of Commerce," 1590, 
^vhere he quotes a passage from a work by a Piedmontese Jesuit, Botero, 
" On the Causes of the Greatness of Cities," in which the writer puts the 
question — " AYhat is the reason that cities, once grown to greatness, in- 
crease not onward according to that proportion ?" and gives the Malthu- 
sian answer), its bearing and importance with reference to the interests 
of mankind weie all but wholly unappreciated until Malthus wrote. He it 
was who first called attention to the vast consequences involved in a foct 
patent to eveiy observer, and occasionally taken notice of in particular in- 
stances, but never before understood in its full significance. And this, I 
may observe, is the nature of almost all discoveries in the region of social 



1QQ THE MALTHUSIAN DOCTRINE 

giiage, " the constant pressure of population against 
subsistence " — gave tlie key to many social and historic 
problems : disclosed, for example, the latent cause by 
virtue of which the world has been peopled ; which 
forced the shepherds of Asia from the primitive birth- 
place of the human race ; which led the Greeks to 
throw off numerous colonies ; which compelled the 
great migrations of the northern barbarians ; and which 
is now sending successive swarms of emigrants to carry 
the English race and language to the utmost corners 
of the earth. 

Armed with the same principle, Mai thus was enabled 
to give a complete and philosophic answer to the com- 
munistic plans which were at that time ardently advo- 
cated by Godwin, Owen, and others, by showing that, 
as such schemes offered no inducement to the exercise 
of prudential restraint, and removed those which al- 
ready existed, they were defective just in that point 
without which human improvement was impossible : 
they provided no security against a redundant j)opula- 
tion — none, therefore, against the want and misery 
which a redundant population must occasion. 

The practical lessons which Malthus deduced from 
the law of population were no less important. Up to 
the time when the essay on population was written the 
prevailing opinion among statesmen of all shades of 
politics was that a dense population was the surest 

inquiry, as well as to some extent also in the sciences of organic nature. 
For example, the facts which form the basis of the Darwinian doctrine of 
species had not only been often noticed before, but, as Mr. Darwin shows, 
had been systematically acted on by breeders and others — in fact, made 
the basis of an art. No one, hoAvever, will say that this detracted from 
the originality of Darwin's discorerj". 



OF POPULATION. -^q>j 

proof of national prosperity, and tlie encouragement of 
population the first duty of a statesman. As tlie 
gentle humorist put it, the honest man wlio married 
early and brought up a large family was thought to do 
more real service than he who continued single and 
only talked of population. Under the influence of this 
delusion, colonization^ was discouraged, as tending to 
depopulate the mother country, while the poor-laws, 
over and above their indirect influence in underminincr 
individual providence, placed a direct premium upon 
multiplication ; and in general every plan for the im- 
provement of society was approved and supported just 
in proportion to its supposed influence in augmenting 
the numbers of the people. The reasonings of Malthns 
went, as I have explained, to establish a conclusion di- 
rectly opposite to this — to show that, as regards the 
number of a people, the danger lay on the side, not of 
deficiency, but of excess ; and that, therefore, plans of 
social improvement were to be approved, not in propor- 
tion as they tended to encourage the increase of popula- 
tion, but in proportion as they tended to develop those 
qualities of self control and providence on which its re- 
striction within due limits depends.^ 



' "Emigration," snj's Doctor Johnson, "is hurtful to luiman hapjii- 
ness, for it spreads mankind." Dean Tucker, one of the few Engliiihmen 
who, during the Amci-ican War of Independence, favored separation, did 
so expressly on the ground that it -would check emigration. See his 
"Tracts," p. 20G. 

^ It by no means follows from any thing that has been said above that 
paucity of population or the slowness of its advances is to be taken as a 
proof of national prosperity ; or, vice versa, that a numerous or rapidly 
increasing population is inconsistent therewith, as is almost invariably as- 
serted or implied by anti-Malthusian writers. Mr. Eickards, e. g., says : 
" Mr. Malthus and the disciples of his school unite in representing the 



leg THE MALTHUSIAN DOCTRINE 

Such were some of the consequences which resuked 
in social and political theory and practice from the great 

supiDOsed pressure of population against food as increasing in intensity in 
direct proportion to the populousness of a community " and, after giving 
the number of inhabitants to the square mile in some of the principal 
countries in the world, the result of the comparison being to show the 
greatest density of population in England, he adds, " England, therefore, 
is the country in which, according to the theory in question, the pressure 
of over-population ought to be most severe." — "Population and Capital," 
pp. 117, 118. 

It is evident that the theory in question involves no such, consequence, 
referring, as it does, to the relation subsisting between population and 
food, and asserting nothing whatever respecting the absolute amount of 
either. The statement, however, is not simply an unwarrantable inference : 
it amounts to a direct misrepresentation of Malthus, since it imputes to 
him an opinion which he has in terms disavowed — e. g., ''''It is an utter 
viisconception of my argument to infer that I am an enemy to population. 
I am only an enemy to vice and misery, and consequently to that unfa- 
vorable proportion between population and food which produces these 
evils. £ut this unfavorable j^roportion has no necessary connection with 
the quantity of absolute population which a country may contain. On 
the contrary, it is more frequently found in countries which are very thinly 
peopled than in those which are more populous. . . . In the desirableness 
of a great and efficient population, I do not differ from the warmest ad- 
vocates of increase. I am perfectly ready to acknowledge, with the writers 
of old, that it is not extent of territory, but extent of population, that 
measures the power of states. It is only as to the mode of obtaining a 
vigorous and efficient population that I differ from them, and in thus dif- 
fering I conceive myself entirely borne out by experience, that great test 
of all human speculations." 

The practical difference in the results to which Malthusian and anti- 
Malthusian views lead may be made clearer by considering how they would 
apply in a given case. 

The stationary state of population in Erance, which has lately been made 
the subject of much remark, would probably be regarded by both schools 
as indicating something amiss in the social condition of that country ; but 
while the anti-Malthusian would regard it as the source of the disease, the 
Malthusian would consider it as merely a symptom, and a symptom, ps 
far as it went, alleviative of the disorder. According to the views of the 
former, the proper cure for the social malady would be to encourage pop- 
ulation by offering premiums for large families, or by throwing the respon- 
sibility of providing for them on the state. I do not say that any one 
now would seriously recommend this policy, but I say it is a legitimate 



OF POPULATION. 1G9 

work of Maltlius. It appears to me that, iu following 
the course which led liim to the result he reached, Mai- 
thus followed the o]ily course by which important eco- 
nomic truths are to be disco-s'ered. You will observe, 
his method was strictly in conformity with that which I 
have been recommending in these lectures as the scien- 
tific method of Political Economy. He commenced by 
considering the nature and force of a known principle 
of human nature : he took account of the actual exter- 
nal conditions under which it came into operation ; he 
traced the consequences which would result supposing it 
to operate unrestrained under these ascertained condi- 
tions ; he then inquired how far in fact the principle 
had been restrained ; and, lastly, investigated the nature 
of the antagonizing agencies through the operation of 



consequence from anti-Malthusian doctrines ; it was universally accepted 
as such, and acted on as such, up to the close of the last centur}^ ; and if 
the same policy is not still openly advocated, it is owing to the influence 
which the writings of Malthus have exercised even among those who af- 
fect to. repudiate his teaching. 

On the other hand, the Malthusian would regard the stationariness of 
population in France as an alleviative symptom of the social malady. 
That population does not advance is, indeed, in itself (apart from other 
considerations) an evil — it implies, at all events, a certain negation of hu- 
man happiness ; but it is better that population should not advance than 
that it should advance in increasing pauperism and wretchedness. The 
Malthusian, therefore, would consider how the material resources of France 
might be expanded, and her means of supporting population increased ; 
but he would carefully abstain from encouraging population, because he 
would know that, owing to the natural strength of the principle, however 
great might I)e the expansion of her resources, population would advance 
at least as fust as was desirable. On the contrary, he would take care, 
while endeavoring to augment her means, not to weaken, but rather to 
strengthen, those prudential habits which at present exist. No possible 
immediate gain, if obtained by a relaxation in this respect, would be con- 
sidered by him as an adequate compensation for the future evils which 
such relaxation would entail. 

II 



lYO TEE MALTHUSIAN DOCTRINE 

wliich tne restraint was effected. Bj these means he ar- 
rived at the ultimate causes in the principles of human 
nature, and the facts of the external world on which the 
condition of the mass of mankind in the matter of suh- 
sistence depends, and furnished for the first time the so- 
lution of an important problem in the laws of the dis- 
tribution of wealth. 

§ 3. So much, then, for the doctrine of Maltlms; and 
now for his opponents. One of the most prominent of 
tlie writers who have recently taken the field against him 
is Mr. Kickards, late Professor of Political Economy at 
Oxford. Of his work on " Population and Capital " the 
chief portion is devoted to an elaborate attack on the 
position of Malthus. The objections advanced by Mr. 
Pickards are not absolutely new,^ but they are stated by 
him with greater fullness and clearness than I have seen 
them elsewhere, and I shall, therefore, avail myself of 
his statement of them. The following passage is taken 
from the work just referred to : 

" It is obvious that there are two mcthocls by which the 
respective rates of increase of man and of subsistence may 
be compared. They may be regarded — ^I mean, of course, 
both the one and the other — either in the abstract or in 
the concrete ; either potentially or practically. We may 
investigate, for instance, according to the laws of nature 
manifested by experience, what is the stated period within 
which a given society of human beings ai'e physically ca- 
pable of doubling their numbers, abstracting the operation 
of those checks that impaired longevity and increased mor- 



^ SceLawson's " Lectures on Political Economy ;" alsoLaing's " Trav- 
els in Europe," chap. iii. 



OF POPULATION. 171 

tality •which may be found practically keeping clown the 
number of any society. On the other hand, we may esti- 
mate the potential rate of increase of those animals or sub- 
stances which are adapted for humaii subsistence, assum- 
ing no obstacle to their multiplication to arise from the 
difficulty of finding hands to rear or space upon the eartli 
to nourish them. By this method we may ascertain which 
of the two elements, population or subsistence, is physical- 
ly capable of the greater expansion in a given time. Or 
we may ado2)t another mode of testing their relative rates 
of increase — we may compare the progress of man and of 
production in the actual state of any community, or of all 
communities together. In all existing societies there are 
checks in operation npon the multiplication of the human 
species. Tliere are checks, likewise, upon the indefinite in- 
crease of the animal and vegetable world. We may take 
the operation of the checks into account on both sides of 
our calculation. In any given country, or in the world at 
large, if we like it better, we may compute, with reference 
to the actual state of things — looking to the experience of 
the jDast, and to the circumstances of the present, to all 
the causes, social, moral, or political, which restrain the 
Ijropagation botli of man and of his food — what has actual- 
ly been, or what probably may be henceforward, the com- 
parative rates of increase of population and of production. 
Either of these two metliods of comparison would be fair 
and logical. I need scarcely add that the latter Avill be 
more likely to conduce to a useful practical conclusion. 
But a third method, which can not fail to lead us by the 
road of false logic to an utterly wrong result, is that of 
comparing the potential increase of mankind, according to 
the unchecked laws of nature, Avith the actual progress in 
any given country of prodirction, excluding the operation 
of the counteracting forces on the one side, importing theni 
into the estimate on the other. It is no wonder, when we 
use such a balance as this, if the scales are found to hang 
prodigiously unequal. . . . 

" But it requires nothing more tlian a careful attention 



172 '^^i^ MALTUUSIAN DOCTRINE 

to this point to bring out in a clear point of view the fun- 
damental fallacy of the whole argument. What is that ra- 
tio in regard to the multiplication oi subsistence Avhich Mr. 
Malthus has placed in contrast with the potential increase 
of human beings? J^ot the potential increase of animal 
and A-egetable existences proper for the food of men under 
the like favorable conditions ; ' the power left to exert it- 
self with perfect freedom,' limited by no clieck or obstacle, 
which formed his datum in regard to population. He en- 
ters into no estimate as to the periods in which, accord- 
ing to the laws of nature, the fruits of the earth, the corn, 
the olive, and the vine, are capable — it is vain to talk of 
duplication in such cases, but^ — of multiplication, some tliir- 
tyfold, some sixty fold, some a hundredfold. He omits to 
consider the almost marvelous fecundity of some of those 
animals which form, in civilized communities, the chief 
subsistence of the mass of the people. . . . His calcula- 
tion as to the ratio in which subsistence may be multiplied 
is founded upon the state of things then actually existing 
in England. He compares the abstract with the concrete 
— nature, in the region of hypothesis, acting in 'perfect 
freedom,' with nature obstructed by all the ' checks' which 
restrain production in the actual world," ^ 

■ The first point to be remarked upon in this is that Mr. 
Rickards does not here deny the doctrine of Malthus in 
the sense in which Malthus asserted that doctrine — he 
admits that in this sense " the scales" do " hang prodig- 
iously unequal;" nor does he impugn the reasoning by 
w^hich Malthus deduced from the doctrine thus under- 
stood the conclusions which it was the object of his es- 
say to establish : in short, he Neither denies the premises 
of the Malthusian argument, nor their sufficiency to es- 
tablish the Malthusian conclusion. The passage, there- 

* "Population and Capital," pp. 68-70, 73, 75. 



OF POPULATION. 173 

fore, wliicli I liave quoted, if it be intended as any thing 
more than a verbal criticism on the form in which the 
meaning of Malthus is expressed, mnst be regarded as 
an example of the fallacy called ignoratlo elenchi; and 
if my object were simply to defend the Malthnsian doc- 
trine, I might at once pass by these objections as irrele- 
vant. As an example, however, of the confused notions 
which prevail respecting economic method, it will be de- 
sirable to consider them somewliat more at length. 

I propose, therefore, to show that, while the compari- 
son instituted by Malthus is perfectly legitimate and log- 
ical, those suggested by Mr. Ilickards are wholly irrele- 
vant to the ends of economic science, inasmuch as, wheth- 
er concluded in the affirmative or negative, they illustrate 
no economic principle whatever, and afford us no assist- 
ance in solving any problem presented by the phenom- 
ena of wealth. 

And here I may remark in passing that, granting for 
the moment that a comparison of the abstract with the 
concrete be inadmissible, the criticism may be at once 
obviated by substituting for the word " subsistence " the 
expression " capacity of the soil to yield subsistence," 
which equally well conveys the meaning of Malthus. 
We may then compare the abstract wnth the abstract, 
the " potential fecundity" of man with the "potential" 
fertility of the soil ; and we may deduce from the prop- 
osition thus stated precisely the same conclusions which 
it was the object of Malthus to inculcate.* 

' Mr. Eickards, in fact, elsewhere states the question in this way : "Now, 
precisely the same assumption— that of the diminishing productiveness of 
the land as compared with the undiminished power of human fecundity — 
forms the basis of the Malthusian theory." — "Population and Capital," 
p. 127. 



174 THE MALTIIUSIAN DOCTRINE 

But wliy, let us ask, should a comparison of the ab- 
stract with the concrete be necessarily illogical ? I know 
of no criterion by which to decide on the propriety of a 
comparison except by reference to the object for which 
the comparison is instituted. The object which Malthus 
had in view in writing his essay was to ascertain the in- 
fluence of the principle of population npon human well- 
being;^ to ascertain whether the natural force of the 
principle was such that, with a view to the happiness of 
mankind, it should be stimulated or restrained ; whether 
it was desirable that inducements should be held out 
tending to encourage early marriages and large families ; 
or, on the contrary, whether we should favor those insti- 
tutions and usages of society of which the tendency is 
to develop the virtues of prudence and moral restraint 
in the relations of the sexes. This was clearly and prop- 
erly an economic question — it was a question as to the 
influence of a given principle on the distribution of 
wealth ; and it was one which, from the terms in which 
it is stated, evidently involved the very comparison to 
which Mr. Kickards objects — a comparison of the natu- 
ral and inherent force of the principle of population with 
the actual means at man's disposal, situated as he is in 
the world, for obtaining subsistence — a comparison of 
" nature in the region of hypothesis, acting with perfect 
freedom, with nature obstructed by all the checks which 

' " To enter fully into this question, and to enumerate all the causes 
that have hitherto influenced human improvement, would be much beyond 
the power of an individual. The principal object of the present essay is 
to examine the effects of one great cause intimately united with the very 
nature of man ; which, though it has been constantly and powerfully oper- 
ating since the commencement of society, has been little noticed by writers 
who have treated this subject." — Malthus, "Essay on Population," p. 2.- 
ed. 1807. 



OF POPULATION. 175 

restrain prodnction in the actual world." Mr. Rickards, 
tliei-efore, either must maintain that the problem which 
Malthus proposed to solve — the influence of the princi- 
ple of population npon human well-being — upon the dis- 
tribution of wealth — was not a legitimate problem, or 
he must admit that a comparison of the abstract with 
the concrete is not an improper comparison. 

Indeed, if the consideration of the tendency of a 
given principle — its "potential" capacity — in connec- 
tion with the "actual" circumstances nnder which it 
comes into operation, is to be proscribed as involving 
a comparison of the abstract with the concrete, it is 
difficult to imagine how the complex phenomena of 
nature are to be investigated, and traced to the various 
causes producing them. 

But, further, I maintain that neither of the compar- 
isons, insisted on by Mr. Eickards as being the only 
legitimate comparisons, can lead to the discovery of 
any economic principle whatever, or help ns to the 
solution of any economic problem. The first of the 
comparisons suggested by Mr. Eickards as that which 
Malthus might properly have instituted is the compar- 
ison of population in the abstract with food in the ab- 
stract — the "potential" increase of the one with the 
" potential " increase of the other — in a word, the com- 
parison of the fecundity of a human pair with the fe- 
cundity of a grain of wlieat. Had he instituted this 
comparison, he would, says Mr. Eickards, have done 
that wiiicli at least " was logical and fair," and, we 
may safely admit, would have been led to no conclu- 
sion that could have disturbed the serenity of the most 
orthodox philosopher. 



176 THE MALTIIUSIAN DOCTRINE 

There can be no doubt that the capacity of increase 
in a grain of wheat (the conditions most favorable to 
its cultivation being assumed) is immeasurably greater 
than the capacity of increase in mankind (the condi- 
tions most favorable to their multiplication being also 
assumed) ; inasmuch as while population under the 
most favorable circumstances takes twenty or twenty- 
five years to double itself, a grain of wheat in rich soil 
may yield twenty or thirty or forty fold in a year ; and 
it is quite possible that in a work on the comparative 
physiology of plants and animals this fact may possess 
some importance. But the question for a political 
economist is, what economic principle can be deduced 
from it ? What light does it throw on the class of 
problems with which he has to deal ? Mr. Kickards 
will perhaps reply — it follows from the comparison 
that subsistence tends to increase faster than popula- 
tion. Understood in the sense Malthus affixed to the 
terms, this proposition would represent an important 
tendency influencing the phenomena of wealth — in 
other words, an economic law : were it true in this 
sense that "subsistence tended to increase faster than 
population," all the inferences which Malthus drew 
from the opposite principle, and, I may add, most of 
the doctrines of Political Economy as they are received 
at present, might be reversed ; nay, the most important 
phenomena of society as it is at present constituted 
would be inexplicable. But, when understood as Mr. 
Eickards insists on understanding it, the bearing of the 
proposition on economic problems is not obvious. Let 
us test it by actual trial. Assuming, as is undoubtedly 
the case, that the abstract capacity of increase in a grain 



OF POPULATION. 177 

of corn is greater than the abstract capacity of increase 
in a human pair, and that in this sense subsistence tends 
to increase faster than population — in what manner 
does the fact here asserted affect human interests in 
their economic aspects ? What phenomenon of wealth 
does it explain ? What practical lesson does it afford ? 
Does it throw any light on the causes on which the 
progress and physical well-being of society depend ? 
Does it explain why rent tends to rise and profits to 
fall as society advances ? Why the English laborer 
receives less than the American, and more than the 
Uindu? Why old countries import raw produce and 
export manufactured articles, while new countries re- 
verse this process ? Does it explain wliy, as civiliza- 
tion advances, the condition of the mass of the peojjle 
generally improves ? Kot one of these questions can 
be completely answered without reference to the doc- 
trine of population as Malthus stated and nnderstood 
that doctrine ; but if, with Mr. Richards and those who 
agree with him, we are to understand the doctrine as 
expressing a comparison of the tendency to increase i)i 
liuman beings, not with the actual means at their dis- 
posal for obtaining subsistence, but with the capacity 
of increase in the vegetable world under impossible 
conditions, I can not find that it helps ns in any way to 
the solution of these or any other economic problems, 

I defined an economic law (as you will probably re- 
member) as a proposition expressing a tendency de- 
duced from the principles of human nature and ex- 
ternal facts, and affecting the production or distribu- 
tion of wealth. The comparison instituted between 
population and subsistence by Mr. Richards certainly 

112 



178 THE MALTHUSIAN DOCTRINE 

expresses a tendency deduced from human nature and 
external facts, but is wanting in the other condition of 
an economic law, as I have ventured to define it : it 
expresses no tendency affecting the production and dis- 
tribution of wealth. I can not, therefore, see on what 
ground it is entitled to the place whicli Mr. Kickards 
would assign it. 

The other comparison suggested by our author as one 
that might properly be instituted (and to it he appears 
to attach most importance) is the comparison of " popu- 
lation in the concrete" with "subsistence in the con- 
crete" — the comparison, that is to say, of the progress 
which has actually taken place in the population of a 
given district during a given time, with the progress 
which, in the same district and during the same time, 
has taken place in subsistence. E^ow I am far from 
saying that such a comparison may not bring to light 
facts of a valuable character — facts which, if duly re- 
flected npon and interpreted by the light of economic 
science, may lead to important conclusions, and possi- 
bly to the discovery of some new economic principle ; 
but I entirely deny that a proposition, embodying the 
crude results of this comparison, can be considered as 
a portion of Political Economy, or that it possesses any 
of the attributes of an economic law. 

It is true, indeed, that the term "law" is frequently 
applied to mere generalizations of complex phenom- 
ena — to propositions which simply express the order 
in which facts have been observed to occur ; and j)ro- 
vided the purely empirical character of such general- 
izations be borne in mind, there can be no objection 
to the name. Even in this sense, however, to entitle 



OF POPULATION. lYQ 

a jiroposition to tlie character of a " law," some degree 
of regularity and uniformity in the observed sequence 
is required. ISTow, with respect to the comparison 
which Mr. Rickards proposes to institute between the 
relative advances which have taken place in popula- 
tion and subsistence, no such uniformity or regularity 
is observable. In some nations subsistence has ad- 
vanced more rapidly than population ; in others popu- 
lation has advanced more rapidlj^ than subsistence ; and 
in the same nation at different times the results have 
been different, population and subsistence taking the 
lead by turns. The utmost that can be said with truth 
is that, on the whole, as nations advance in civilization, 
the proportion generally alters in favor of subsistence 
— a proposition which, I think, can scarcely pretend to 
tlie dignity of a " law," even in the loosest sense of that 
word. 

But even if we were to suppose the relative advance 
of population and subsistence to be constant and uni- 
form, and the rate to be well ascertained, I should still 
deny that a proposition embodying the results of this 
comparison could correctly be called a doctrine of Po- 
litical Economy ; that is to say, I should deny that such 
a proposition could with propriety be placed in the 
same category of truths with those which assert that 
within the range of effective competition normal value 
is governed by cost of production ; that fluctuations in 
value are governed by the conditions of demand and 
supply in relation to the particular commodity ; that 
the rate of profit varies inversely with proportional 
wages as understood by Ricardo ; that "economic rent" 
depends on the difference in the returns of the soil to 



180 THE MALTHUSIAN DOCTRINE 

different capitals; in a word, with the most important 
principles of economic science. Each of these propo- 
sitions expresses some tendency affecting the produc- 
tion and distribution of wealth ; they have all been de- 
duced from known principles of human nature and as- 
certained physical facts ; and they are all available in 
explanation of the phenomena of wealth. But a prop- 
osition asserting the results (even supposing these re- 
sults to be perfectly regular and uniform) of a compar- 
ison between population in the concrete and food in the 
concrete, possesses none of these attributes. It does not 
express any tendency influencing the phenomena of 
wealth, but exhibits the composite result and evidence 
of many tendencies ; it is not deduced from the prin- 
ciples of human nature and external facts, but from the 
statistics of society, or from the crude generalizations 
of history ; and, lastly, it is not a principle helping us 
to the solution of any of the problems of our complex 
civilization, but itself presents a complex problem for 
our solution. 

I say that such a comparison will not help us to the 
solution of any of the problems of our complex civiliza- 
tion ; for, granting the fact to be as Mr. Eickards asserts 
it to be, and as, on the whole, making large allowance 
for exceptional cases, I believe it is — granting that, as a 
general rule, the means of subsistence, and we may add 
the comforts and luxuries of life, have advanced in civ- 
ilized communities more rapidly than population, what 
light does this throw either upon the influence of the 
principle of population on the one hand, or of the causes 
regulating the production of subsistence on the other — 
of their influence, I say, upon the progress of society 



OF POPULATION. 181 

and the phenomena of wealth ? All that we are war- 
rianted in inferring from the state of things assumed is 
the predominance on the wJiole in the given circumstan- 
ces of the causes tending to advance over those tending 
to retard the social or economic condition of a nation ; 
but it affords no .ground for inference respecting the 
character or inherent strength of any particular cause 
affecting that condition — such as the principle of popu- 
lation. The fact of the arrival of a vessel in N'ew York 
is no proof that she had the wind in her favor : she may 
have had recourse to steam to counteract its effects. The 
speed at which she travels and the direction of her 
course do not depend upon the force of the steam im- 
pelling, or of tlie winds assisting, or of the currents 
thwarting, or of the friction impeding, but is " the last 
result and joint effect of all." Such, also, is the progress 
of society. It represents the result of a vast number of 
forces, physical, intellectual, social, and moral; and it 
advances or recedes or oscillates as one kind or other 
prevails. But from the mere consideration of the rougli 
result, the general total, it would be as vain to attempt 
to deduce the character or tendency of any single cause 
affecting it — of any given economic principle — as it 
would be to elicit a theory of the Atlantic currents from 
the statistics of voyages between Liverpool and New 
York. 

Mr. Eickards, ho-svever, holds that the comparison 
which we have been considering does throw light on the 
causes of economic phenomena. The actual advance 
which the various communities have made in material 
improvement, proves, according to him, "the natural as- 
cendency of the force of production over the force of 



182 THE 3IALTHUSIAN DOCTRINE 

population." " It can have emanated," he says, " from 
no other source. The primitive possessors of the eartli 
were destitute of all things. The earth has been the 
source of all the wealth which has accumulated in the 
hands of their descendants. ... If, while the number of 
cultivators has gone on increasing, this surplus has be- 
come greater and greater, and the whole people wealth- 
ier, it must follow that production has a tendency to in- 
crease more rapidly than population, and that the accu- 
mulation of wealth which accompanies the progress of 
society is attributable to this cause." ^ 

In order to the cogency of the argument it is obvi- 
ously necessary that the terms "force of production" 
and "force of population" should include all the causes 
influencing the economic progress of society; and in this 
sense to say that the force of production is superior to 
the force of population is only in other words to say 
that the causes tending to advance society are on the 
whole more powerful than the causes tending to re- 
tard it; the name "force of production" being given 
to the one set of causes, and that of "force of popula- 
tion " to the other. It is, in short, a mere reproduction 
of the fact of progress under another form, but does not 
advance us a step toward an explanation of that fact 
which is the problem to be solved. It is as if a person 
should argue that the fact of a train leaving Dublin and 
arriving in Belfast proves the ascendency in railways of 
the " force of locomotion " over the " force of immobil- 
ity," on the ground that the actual progress of the train 
could be due to no other cause; and the argument 

' P. 115. 



OF POPULATION. 1S3 

would be valid — a similar assumption being made to 
that latent in the reasoning I have quoted, namely, that 
the " force of locomotion " included all the causes pro- 
pelling the train, and the " force of immobility " all the 
causes retarding it. The engineer, however, who should 
make the discovery would scarcely find that he had add- 
ed much to his stock of useful knowledge. 

§ 4. I have now endeavored to show that the compar- 
isons suggested by Mr. Richards in lieu of that which 
Malthus instituted, lead to no economic principle what- 
ever, and furnish no aid toward the solution of any prob- 
lems connected with the phenomena of wealth. In fur- 
ther proof of the entire irrelevancy, with reference to 
the ends of the science, of Mr. Eickards's exposition of 
the laws of population, I may add that, having estab- 
lished these laws, apparently to his oAvn satisfaction, he 
nevertheless does not apply them to the solution of any 
problems of wealth, nor does he attempt to make them 
the ground of any practical suggestions ; on the contra- 
ry, such practical lessons as he does inculcate on the sub- 
ject of population are directly at variance with his own 
theoretical conclusions. 

You have seen that, while Malthus maintained that 
population tended to increase faster than subsistence, he 
held, consistently with this, that the principle of i^opula- 
tion was a power which it was desirable to restrain, and 
advocated, as a means to this end, the formation of hab- 
its of prudence and self-control. Mr. Richards, as you 
liave also seen, emphatically denies this doctrine : he 
maintains, on the contrary, that subsistence tends to in- 
crease faster than population — that it does so both in the 



184: THE MALTHUSIAN DOCTRINE 

"abstract" and in the "concrete," botli "potentially" 
and " actually ;" and, further, that " production " as com- 
pared with " population " is " the greater power of the 
two." Mr. Eickards having thus given a direct negative 
to the principle of Malthus, it would be natural to sup- 
pose that in the practical treatment of the question he 
would be equally at variance with him. It would be 
natural to suppose that, as he maintains that subsistence 
both " potentially " and " actually " tends to outstrip pop- 
ulation, he would be released from all apprehension as 
to the danger of population outstripping subsistence. If 
" production " be the " superior power," there seems no 
reason — provided only men be industrious, provided only 
the machinery of production be kept in motion- — that 
mankind should not multiply without stay or limit, since, 
on this hypothesis, it is always competent to them to 
keep the means of physical comfort in advance of their 
increase. There seems no reason, in short, that the popu- 
lation of every country in Europe should not advance at 
the American rate, constantly doubling itself in periods 
of twenty-five years ; or, at least, if there be any reason 
for restraining population, we should not expect to find 
it in the difficulty of procuring subsistence. You will, 
therefore, probably be surprised to find that Mr. Eick- 
ards not only recognizes the necessity of placing a re- 
straint on the principle of population, but does so on the 
express ground of the limits placed by nature on the in- 
crease of subsistence. 

" Individual prudence," he says,' " is the proper check 
to precipitate marriages ; an appeal to the consequences 

'P. 204, 



OF POPULATION. 185 

wliich will recoil on the parties themselves and tlieir in- 
nocent offspring is the appropriate and cogent ai'gu- 
ment to deter them from rash engagements. Let it not 
be said," he continues, " that in thus arguing I am sub- 
stituting a principle of selfishness for one of duty. It 
is not so : prudence is here an obligation of morality." 
..." Whatever fluctuations," he adds, " may betide the 
labor market, let each man, in forming his priva,te con- 
nections, act with the forethought and discretion that 
become a responsible being, and society will have no 
cause of complaint against him, for over-population will 
be impossible." This is excellent advice. But what are 
tlie gromids of it ? — why should " over-population " be 
possible in the absence of forethought and discretion? 
why should prudence in respect to marriage be an ob- 
ligation of morality ? Simply, Mr. Richards tells us, 
quoting the language of M. Say (not to refute, but to 
adopt it), because "the tendency of men to reproduce 
their kind, and their means of doing so, are, we may say, 
infinite ; but their means of subsistence are limited." ' 

I must leave Mr. Rickards to reconcile his practical 
lessons with his theoretical conclusions — his advocacy of 
a restraint on population on the ground of the limitation 
of subsistence, with his doctrine that subsistence "' poten- 
tially " and " actually " tends to increase faster than 
population. It appears to me that the conclusion is in- 
evitable — either his doctrines, in the sense in which he 
understands them, are irrelevant to the purposes of Po- 
litical Economy, or his precepts are in direct contraven- 
tion of his doctrines. 

' v. ISG. 



IgQ THE MALTHUSIAN DOCTRINE 

Before concluding, I must notice one more position of 
Mr. Rickards. In the preface to the work which I have 
been noticing he puts this dilemma : " If the conclusion 
of the Essay on Population be true, it seems to me to in- 
volve this inevitable consequence — that there has been 
a miscalculation of means to ends in the arrangements 
of the universe — either man has been made too prolific, 
or the earth too sterile.'" Let us meet this argument 
frankly. The conclusion of Malthus does undoubtedly 
involve the consequence that the earth is too sterile for 
the fecundity of man— for the possible increase of man- 
kind; the earth can not forever yield food as fast as hu- 
man beiugs can multiply ; neither in this case nor in 
any other has provision been made for the unlimited 
gratification of any human propensity. Not even the 
most amiable instinct, not even the instinct of compas- 
sion, can be released from the control of prudence and 
conscience without entailing injury alike on the possess- 
or and on society. Whether this be a ground for charg- 
ing the Creator of the universe with a " miscalculation of 
means to ends" it is not for me to say; but the fact, I 
apprehend, is indisputable. If it be an " end " of cre- 
ation that the human species should multiply unre- 
strained, the conditions under which man has been 
placed in the world do not, it must be confessed, seem 
well calculated for this purpose, and " the arrangements 
of the universe " do certainly, on tJds hypothesis, seem 
liable to the charge conveyed in the passage I have 

1 "'Wherever Providence brings mouths into the world, it will find 
wherewithal to feed them ;' the profane fonn of the theory," says the 
Cambridge Don, " is that you ought to marry, because your relations 
can't let you starve." 



OF POPULATION. 1S7 

quoted. For my part, I do not take this view of the 
" ends " for which " the arrangements of the universe " 
have been planned ; bnt, as apparently Mr. Kickards 
does, I must leave him to reconcile it as he best can 
with those precepts of prudence directed against " over- 
population" which he has had the practical wisdom to 
inculcate. 



LECTUEE yill. 

OF THE THEORY OF BENT. 

§ 1. Of those principles of Political Economy wliich 
have of late years been made the subject of controversy 
among economists, one of the most fundamental and im- 
portant is the theory of rent, generally designated from 
the name of its ablest expounder, Mr. Ricardo. Mr. 
Richards, of Oxford, some of whose objections to the 
doctrine of population, as taught by Malthus, I consid- 
ered in my last lecture, is also an opponent of Kicardo's 
theory of rent. In the sixth lecture of his work on 
Population and Capital he remarks upon the close rela- 
tion which exists between these two doctrines. " The 
arguments for both," he says, " rest on one and the same 
hypothesis." ..." The same assumption — that of the di- 
minishing productiveness of the land as compared with 
the undiminished power of human fecundity — forms the 
basis " of both theories. 

Substantially I take this to be a correct statement of 
the case, and I am quite prepared to stake the truth of 
the doctrines in question upon the issue thus set forth. 
But, before adverting further to Mr. Eickards's objec- 
tions, it will be desirable first to understand what the 
doctrine of rent is, as well as its proper limitations. 

The object of a theory of rent is to explain the fact 
of rent, and the conditions which determine its rise and 



THE THEORY OF RENT. ISO 

fall. In order, therefore, to judgG of the theory, ^vo 
must form a clear and definite idea of the fact of -which 
it is designed to afford the explanation. The fact, then, 
which the theory of rent is adduced to explain is the ex- 
istence in certain branches of industry of a permanent 
^surplus value in the product, beyond what is sufficient 
to replace the capital employed in production, together 
with the usual profits which happen to prevail in the 
country. Thus a farmer, after replacing the circulating 
stock employed in cultivating his farm with the usual 
profits, and reserving, besides, interest on such capital as 
he may have sunk in outlay of a more permanent kind, 
finds that the proceeds of his industry still leave him an 
element of value. This element of value, if he be mere- 
ly the occupier of his farm, goes to his landlord ; or 
should he during the continuance of his lease be able 
to retain a portion of it, he will at all events on its ter- 
mination be compelled by the competition of other farm- 
ers to hand it over to his landlord. On the other hand, 
if the farmer be himself the proprietor of the land 
which he tills, the sum in question will of course accrue 
to him along with his other earnings. In the same way 
the patentee of a successful invention, on selling the 
produce of his industry, finds himself also in possession 
of an element of value over and above what is sufficient 
to replace the cost of production, together with the or- 
dinary profits. Xow it is this surplus value, whether de- 
rived from agricultural or from manufacturing opera- 
tions, whether retained by the producer or handed over 
to the owner of the productive instrument, wliich consti- 
tutes "rent" in the economic sense of that word, and 
the existence of which is the fact to be accounted for. 



190 THE THEORY OF RENT. 

You will observe, I say " in the economic sense of the 
word," because this is one of those cases in which the 
necessity under which political economists are placed of 
using popular phraseology in scientific discussions has 
led to much confusion of ideas and perplexity of reason- 
ing. The term " rent " is in popular language applied tO' 
the revenue which the proprietor of any article derives 
from its hire. Such a revenue, however, may owe its 
existence to different causes. The rent, e. g., which a 
landlord receives from a farmer for the hire of his land, 
is derived from a surplus value in the proceeds of the 
farmer's industry beyond what will cover the expenses 
and profits of his farm. On the other hand, the build- 
ing-rent of a house represents no surplus value of this 
kind. It is not any thing in addition to the ordinary 
profit, but is simply the ordinary profit or interest which 
the builder of the house receives on the capital which 
he has sunk.' There may, indeed, be fluctuations in the 

' It will perhaps occur that the rent of land may equally he regarded as 
the interest of the landlord's capital sunk either in the purchase or im- 
provement of his estate. So far as the rent paid by the tenant is the con- 
sequence of improvements made in the land, the case is no doubt analo- 
gous to that of building-rent, and the payment which the landlord receives 
in consideration of such improvements is properly regarded as the returns 
on the capital which he has sunk. But with regard to the remainder, the 
same explanation is not available. The payment of this by the tenant is 
not a consequence of the landlord's purchase of the land (in the same way 
as the increase in his rent, in consideration of improvements, is a conse- 
quence of these improvements) : on the contrary, the money paid for the 
purchase of the land is a consequence of the rent. Farmers do not pay 
rent because landlords have invested money in the purchase of their es- 
tates ; but landlords invest money in this way because farmers are willing 
to pay rent. If landlords had obtained their estates for nothing, as many 
have so obtained them, farmers would not the less pay rent ; on the other 
hand, if, owing to any cause, corn fell permanently in value, rents would 
fall, whatever might have been the amount of the luirchase money given 
for estates. 



THE THEORY OF RENT. 191 

returns upon building speculations, as upon any other 
speculations — the speculators receiving sometimes more, 
sometimes less, than average profits ; but there is in this 
case nothino' like what occurs in the case of ao-ricultural 
rent — a permanent surplus beyond what is suflicient to 
indemnify the capitalist. The existence of this surplus, 
then, is the problem -which the theory of rent has to 
solve ; and the question is, what are the causes to which 
it owes its existence, and what are the laws which regu- 
late its amount ? 

Several theories have at different times been advanced 
in explanation of rent. That which was given by the 
French economists, and which, to a certain extent, was 
adopted by Adam Smith, traced the phenomenon to the 
superior productiveness of agricultural industry — to the 
positive fertility of the soil. Between agricultural in- 
dustry and manufacturing, commercial, and other kinds, 
it was argued, there is this difference — that in the for- 
mer alone is there a positive addition made to the com- 
modity which forms the subject-matter of the industry. 
The manufacturer alters and adapts his material to some 
new use. The merchant transfers the article of his trade 
from the scene of its production to the place where it 
may be required. But the agricultui'ist alone emploj-s 
the matter of his work in such a way as to lead to a 
positive increase in its quantity. Nature, it was said, co- 
operates here with human effort, and there consequent- 
ly arises in agriculture 2^ jprodidt net, ox "rent," which 
has no place in other fields of human effort. But, pass- 
ing by other obvious objections to this theory, it suffices 
to consider that, whatever be the fertility of the soil and 
the abundance of the crop, the existence of a sui-pliis 



j^92 ^^^^ THEORY OF RENT. 

value ill the product depends not on these circumstances 
alone, but also upon the price paid for the commodity, 
in order to see that it fails to solve the problem of rent. 
It offers no explanation of the causes which regulate the 
price of agricultural produce. It gives no account of 
the fact that this price remains constantly high enough, 
not only to replace to the farmer the expenses of his 
outlay with the usual profits, but to yield a revenue be- 
sides to the owner of the soil.' 

Adam Smith's contribution to the doctrine of rent as 
left by the Physiocrats consisted in the statement that 
the demand for human food was always, and the de- 
mand for other lands of agricultural produce was gener- 
ally, so great, that either could command in the market 
a price which Avas more than sufficient to indemnify the 
farmer, and that the surplus value naturally w^ent to the 
landlord. This, however, still left the problem unsolved, 
and moreover implied an incorrect view of the laws of 
value; since, in the case of a commodity like corn, which 
may be produced in any cpantity required, the price at 
which it sells does not, except during short intervals, de- 
pend on the extent of the demand for it, but on the cost 
of its production. An increase in the demand for a 
manufactured article, e.g., generally leads, as soon as the 



^ M. Courcelle Seneuil claims that the true theory of rent was perceived 
by the Physiocrats, and quotes a passage from Turgot's work, "Observa- 
tions sur le Memoire de M. de St. Pe'ravy," which shows that Turgot rec- 
ognized the fact of the " diminishing productiveness of the soil ;" but there 
is nothing in the passage to show in what way this fact connects itself 
with the phenomenon of rent. I can not hold, therefore, that the solution 
of the problem of rent is among the great services rendered by this dis- 
tinguished philosopher to economic science. — See "Traite d'Economie 
Politique," par J. G. Courcelle Seneuil, tome i. pp. 179, 180. 



THE THEORY OF RENT. 193 

supply has had time to adjust itself to the change, to a 
fall in the price, owing to the circumstance that manu- 
factured articles are generally produced at less cost when 
produced on a large scale. The demand for cotton goods 
has probably been decupled in the course of the last half 
century, but this has simply resulted in a decupled sup- 
ply produced at a cheaper cost and sold at a proportion- 
ately lower price. How does it happen, then, that the de- 
mand for human food does not operate in the same way ? 
If, indeed, food were a strictly monopolized article, if 
only a limited quantity of it could be produced, we 
might understand how an increase of demand for it 
might permanently keep up its price above the cost of 
its production. But though land be a strictly monopo- 
lized article (at least in old countries), food is not so, 
since the quantity of food which may be raised from a 
limited area of land, though not infinite, is indefinite ; 
and the maximum has never yet been reached, or nearly 
reached, in any country, and probably never will. The 
question, therefore, again recurs — how does it happen 
that the increased demand for food does not operate in 
the same way as the increased demand for clothes or 
shoes or hats, or other manufactured articles ? How 
does it happen that the price permanently remains at 
such a point as to leave a permanent surplus value over 
and above what is requisite to pay cost of production 
with the usual profit ? This is a question which Adam 
Smith failed to answer ; and he consequently failed to 
solve the problem of rent. 

The first writer who gave the true answer to this ques- 
tion was, I believe, Dr. Anderson, hi a work published in 
1777; but it remained for llicardo fully to perceive tlie 

I 



194 THE THEORY OF RENT. 

importance of the principle involved, and to trace its in- 
fluence in its various bearings on the laws of the produc- 
tion and distribution of wealth. 

The answer to the question is as follows : 
Agricultural produce is raised at different costs, owing 
to the different degrees of fertility of different soils; ow- 
ing also to this, that, even of that corn which is raised 
on the same soil, the whole is not raised at the same cost. 
Now in order that that portion of the general crop of 
the country which is raised at greatest expense be raised 
— that is to say, in order to induce the cultivation of in- 
ferior lands, and the forcing of superior lands up to such 
a point as shall secure to the community the quantity 
of food required for its consumption — the price of agri- 
cultural produce must rise at least sufficiently high to 
indemnify with the usual profits the farmer for this — 
the least productive — portion of his outlay. If the price 
were not sufficient for this, the farmer would withdraw 
his capital from the production of that portion of his 
crop which is raised at greatest expense, and would in- 
vest it in some other business in which he had a fair 
prospect of average profits.' Now there are never two 



* It will, perhaps, be said that the farmer would not withdraw his capi- 
tal under the circumstances; that, being liable to his landlord for his rent, 
he will get the most he can out of his land, whatever be the price of agri- 
cultural produce. I hold, however, that a capitalist farmer (and it is only 
to such that the reasoning appHes) would certainly do nothing of the kind. 
If he have made a bad bargain, and undertaken to pay rent for land of 
such indifferent quality that the produce at the current prices will not re- 
place his capital with the ordinary jirofits, it will be much better for him 
to put up, once for all, with the first loss, to allow his land to lie waste, 
and to turn his capital into some employment in which it will yield him 
ordinary profits, than to continue throwing good money after bad by farm- 
ing at a loss. And this is practically what every farmer does whose lease 



THE THEORY OF RENT. 195 

prices for the same article in the same market. It 
is nothing to the consumer what may be the cost at 
Avhich the article is raised; he simply looks to getting 
what he requires as cheaply as he can. If, therefore, 
the price of agricultural produce be such as to cover 
Avith ordinary profits the cost of that portion of the gen- 
eral crop which is raised at greatest expense — aud I 
have shown that it must be this at least — it will be 77iore 
than sufficient to cover with ordinary profits the cost of 
that portion which is raised at less expense. There will, 
therefore, be on all that portion a surplus value over and 
above what is suflicient to replace the capital of the 
farmer wuth the usual profit; and this surplus value is 
the precise phenomenon of rent which it is the pui-pose 
of the theory to account for. 

§ 2. Such, briefly, is the theory of rent as taught by 
Eicardo. When you have thoroughly mastered this prin- 
ciple, you will find that you have the key to some of the 
most important problems of economic science. The doc- 
trine, however, is one which is peculiarly liable to mis- 
conception ; it has been and, I regret to say, is still the 
subject of much controversy. It may be well, therefore, 
to state in somewhat greater detail than I have yet done 
tlie grounds on which it rests, and to advert to some of 
the principal consequences which flow from it. 

And, in the first place, what are the assumptions on 



comprises lands too poor for profitable cultivation. lie simply does not 
cultivate such land. Instead of employing his surplus capital in the nn- 
profitable cultivation of such portions of his farm, he allows them to lie 
waste, and invests his spare cash in trade, in railway stock, or in some 
other enterprise which promises average profits. 



IQQ THE THEORY OF RENT. 

wliicli tlie theory of rent is founded ? It assumes, first, 
that of the whole agricultural produce of the country, 
those portions which in the market are sold at the same 
price are not all raised at the same cost ; and, secondly, 
that the price at which the whole crop sells is regulated 
by the cost of producing that portion of it which is pro- 
duced at greatest expense. If these two points be grant- 
ed, the existence of a surplus value, or, as we may call it, 
" economic rent," is a logical necessity which it is im- 
possible to evade ; and if v/e take further into account 
the motives which actuate farmers in hiring and land- 
lords in letting their land, we shall see that it is equally 
a logical necessity that, under the action of competition, 
this " economic rent " should pass to the proprietor of 
the coil. The least consideration will make this evi- 
dent. If corn be raised at different costs, and if the 
price be such as to cover with ordinary profits the cost 
of the most costly portion, it can not but be rnore than 
sufficient to cover with ordinarj'- profits the cost of less 
costly portions. In the case, therefore, of all agricult- 
ural produce raised at less than the greatest cost, there 
must arise a "surplus value," And it is equally clear 
that this must be appropriated by the landlord. For, 
though farmers who had leases would be able during 
the currency of these leases to retain any new incre- 
ments of " economic rent" that should arise, on their ex- 
piration they would stand on the same footing as the 
rest of their class. If, under these circumstances, they 
retained the "economic rent," the rate of profits in farm- 
ing would be largely in excess of the rate in other oc- 
cupations. Such an occurrence could not fail to attract 
increased capital to agriculture, and to lead to a competi- 



THE THEORY OF RENT. I97 

tion for farms, ^vllich could only find its natural ternii 
nation when agricultural and other profits were brought 
to a level — a point at which the whole " economic rent," 
or surplus value, would be transferred to the landlord. 

I think, therefore, I am warranted in saying that, if 
the two assumptions which I have stated be granted, the 
theory of rent taught by Kicardo follows as a necessary 
consequence. We must, therefore, consider what are the 
proofs of these assumptions. 

First, then, I say that, of the whole agricultural prod- 
uce of the country, those portions which sell at the 
same price are not all raised at the same cost ; that is to 
say, that a given barrel of wheat, barley, or potatoes of a 
certain quality is not raised at the same cost as every 
other barrel of wheat, barley, or potatoes of the same 
quality, and therefore comn:ianding the same price. And 
this surely is a proposition that scarcely requires serious 
proof. To deny that some portions of the general crop 
of the country are raised at less cost than others is 
to deny that some soils are more fertile than others, is 
to deny that the county of Meath is more fertile than 
the county of Gal way — the meaning of "more fertile" 
being that a given amount of labor and capital expend- 
ed thereon produces a greater result. The fact, howev- 
er, if seriously questioned, is, like all the axiomatic truths 
of Political Economy, susceptible of direct proof. The 
proper ultimate criterion in this case would be actual 
physical experiment on the soil. Farmers do, in fact, 
perform the experiment, and the result is sufiiciently 
evidenced by the higher rent which they are content to 
pay for some lands than for others.' I think, therefore, 

' Vide ante, p. 51, note. 



;I^98 THE THEORY OF RENT. 

we are warranted in assuming as an incontrovertible 
fact that the whole agricultural produce of the country 
is, taking the same kinds and qualities, not raised at the 
same cost.^ 

But, secondly, the price at which the whole crop sells 
is determined by the cost of producing that portion 
which is produced at greatest cost. It is not, of course, 
meant by this that the market price of corn always ac- 
curately corresponds with the cost of this portion. As 
was explained on a former occasion,^ when it is said that 
cost regulates price, what is meant is that this is the point 
which the price constantly tends to approach — the cen- 
tre toward which it constantly gravitates. This being 
premised, it will not be difficult to prove that the price 
of corn is determined by the cost of producing the most 
costly portion of the general crop. It is clear that the 
price must at least be sufficient to cover this cost with 
the ordinary profit. If it were not, there would be no 
inducement to farmers to continue the production of this 
portion : a farmer will not continue permanently to pro- 
duce corn at a loss. Before he invests his capital in his 

^ One would suppose that this fact, so obvious when stated, could not 
long have escaped the attention at least of "practical men." Yet it was 
a Committee of the House of Commons, who piqued themselves on their 
practical knowledge, that reported that a price of IOO5. to lOos. the quar- 
ter for wheat was necessary to enable farmers to continue the cultivation 
of their land — less than this not being a " remiinei'ative price ;" as if the 
necessary cost of raising corn were some fixed quantity, independent of 
the character of the soil on which it is raised, or of the point to which cul- 
tivation may be forced upon it. On the other hand, it was reserved for a 
" theorist " (Ricardo, in his tract on "Protection to Agriculture") to dis- 
cover that corn may be grown not only in the same country but on the 
same soil at different costs, and that, therefore, the " remunerative price" 
will vary with the state of agriculture. 

* Vide ante, p. 108. 



THE THEORY OF RE XT. 199 

business, he will consider whether he has a fair prospect 
of receiving the ordinary returns on it ; if he has not, he 
will not invest it. But if the price can not permanently 
be less than is sufficient to cover with ordinary profits 
the cost of this portion, it is equally certain it can not 
permanently be more than sufficient to do this. 

This will appear when we consider the following 
facts : That between the worst and the best lands there 
are soils of every possible degree of fertility : some on 
which by dint of high culture corn might be raised, but 
at such a cost that it would not replace the capital ex- 
pended in raising it ; others in which, though the re- 
turns might replace the capital, they would not yield a 
profit ; others, again, in which the returns would yield a 
profit, but less than an average profit ; and others still in 
which the returns will just replace the capital expended 
with average profits, and no more ; and when we consid- 
er, further, that no soil at present in cultivation yields as 
much corn as it might be made by higher cultivation to 
yield ; that in forcing the soil there is a point at which 
the returns replace with ordinary profits the capital ex 
pended, and no more, and beyond which, if cultivation 
were pushed, though it would lead to an increase of 
produce, yet this increase M'ould not be sufficient to re- 
place the outlay with the ordinary profit : in a word, 
that there is a point up to which it is profitable to culti- 
vate, and beyond which it is not profitable to cultivate 
— a fact from which it results that even on the most fer- 
tile soil the cost of production may attain any height, 
however great. Kow if these several considerations be 
borne in mind, it will be seen that the price of corn will 
not, for any long time, remain at a higher rate than is 



200 THE THEORY OF RENT. 

sufficient to cover with ordinary profit the cost of that 
portion of the general crop which is raised at greatest 
expense ; for, were it more than this, the extraordinary 
profit would at once stimulate cultivation ; rich lands 
would be farmed more highly, and lands of a less fertile 
quality than before would be brought under tillage ; and 
the process would continue till either by an increased 
supply the price was brought down to the cost of pro- 
duction, or through the increasing expense of cultivation 
the cost of production rose up to the price.' It follows, 
tlierefore, tliat as the price of corn can not remain for 
any length of time at a lower point than is sufficient to 
cover the cost with ordinary profits of raising the most 
costly portion, so neither can it permanently remain at a 
higher point than is sufficient for this purpose. The ex- 
tent to which cultivation shall be carried in bringing 
poor soils under the plow, and in forcing the better 
qualities — what Dr. Chalmers calls " the extreme mar- 
gin of cultivation" — must be determined by the wants 
of society ; but, wherever that margin may be, whatever 
in the actual state of agriculture may be the cost of 
raising the most costly portion of the general crop, this 
will be the regulator of price — the point which it will 
constantly tend to approach. 

I trust I have now established to your satisfaction the 
two assumptions on which rest Ricardo's theory of rent. 
Let me once more repeat them : Of the total quantitj^ 
of agricultural produce raised in a countrj-, different 
portions, quality for quality, are raised at different costs 
of production ; and, secondly, the price at which agricult- 

' Vide ante, p. lOG, note. 



THE THEORY OF RENT. • 201 

iiral produce sells is determined by the cost of produc- 
ing that portion of the general crop wliicli is raised at 
greatest expense. From these two assumptions, or, as I 
may now call them, facts, it results, as I have already 
shown, that in the cultivation of agriculture in a country 
like England a "surplus value" arises ; while, from tlie 
principles of human natnre brought into play in the 
traffic for farms, it follows that this " surplus value " must 
go in the form of rent to the proprietor of the soil, 

§ 3. The tlicory of rent just set forth explains the phe- 
nomenon of rent in the case of all lands on which agri- 
cultural produce is raised at less than the greatest cost 
at which it can be profitably produced ; and this de- 
scription applies to tlie great mass of agricultural land 
in a country like England; but it explains it in this case 
only. It has accordingly been objected to the theory, 
first, that it fails when applied to new colonies in which 
none but the best lands, in point of fertility and situation, 
are under cultivation ; where, tlierefore, since all the 
corn is raised at one and the same cost, there' could, ac- 
cording to Kicardo's theoiy, be no surplus value ; and, 
secondly, that it fails to account for the payment of rent 
in the case of the worst lands under cultivation in every 
country, on w-liich the whole produce is raised at the 
maximum of cost, as well as in the case of those lands 
which are too poor for culti\ation, but which never- 
theless pay rent. 

It can not be denied that the facts are as the objection 
states them to be ; but, if you have fully seized what I 
said on a former occasion as to the kind of proof by 
which economic laws are established or refuted, you will 

12 



202 ^^-^ THEORY OF RENT. 

understand that this by no means amounts to an invali- 
dation of the theory. That theory, as I liave shown yon, 
rests on facts qnite as certain as those which are nrged 
against it, and of far wider reach and more important 
bearing. What the objection proves is, not that the the- 
ory is unfounded, but that, over and above the phenom- 
ena which it accounts for, there are others, not perliaps 
properly described as " economic rent," but of a nature 
closely allied thereto, for which it does not account. 
It is a case, in short, and at the utmost, of what in phys- 
ical science is called " a residual phenomenon," and is 
to be treated in the same way — namel}^, by looking out 
for some new cause or principle adequate to explahi the 
residual fact.* 



1 On the recurrence of a "residual phenomenon " in physical investiga- 
tions it always becomes a question whether the theory, which leaves the 
fact unexplained, is to be retained, accompanied with the hj'pothesis of 
some concurrent cause undetected to which the residual phenomenon may 
be ascribed, or whether the theory should be wholly rejected. But in 
economic reasoning no such questions can arise. The grounds of the dis- 
tinction have been pointed out in the third lecture ; they are to be found 
in the different character of the proof by which ultimate principles in phys- 
ical and economic science are established. The proof of a physical theo- 
ry always, in the last resort, comes to this, that, assuming it to be true, it 
accounts for the phenomena ; whence it follows that the occurrence of a 
"residual phenomenon" in physical researches necessarily weakens the 
proof of the laws which fail to explain it, and, if such exceptions become 
numerous and important, may lead to the entire rejection of the theory. 
On the other hand, it is always regarded as the strongest confirmation of 
the truth of a physical doctrine, when it is found to explain focts which 
start up unexpectedly in the course of inquiry. (Vide Appendix C.) But 
the ultimate principles of Political Economy, not being established by evi- 
dence of this circumstantial kind, but by direct appeals to our conscious- 
ness or to our senses, can not be aifected by any phenomena which may 
present themselves in the course of our subsequent inquiries (the proof of 
the existence of such phenomena consisting also in appeals to our con- 
sciousness or to our senses, and therefore being neither more nor less co- 
gent than that of those ultimate principles) ; nor, assuming the reasoning 



THE THEORY OF RENT. 203 

Let US take, e. g., the case of a new colony for every 
acre of land in wliicli government exacts a rent before 
it permits occupation. Here we will suppose that none 
but the best lands are cultivated, and that all the corn 
produced in the colony is raised at the same cost. Un- 
der these circumstances it is undeniable that rent, or 
what has been called such, has been frequently, and still 
is in many cases, paid. It is certain, however, that farm- 
ers, whether in a new colony or elsswhere, will not en- 
gage in the production of corn as a commercial specula- 
tion if they have not a reasonable prospect of obtaining 
such a rate of return on their investment as prevails in 
the place where they reside. If an emigrant capitalist 
can make thirty per cent, by employing men at gold dig- 
ging, he will not be content with twenty per cent, on grow- 
ing maize. Consequently, before a farmer will consent 
to pay the rent demanded by government for colonial 
land the price of corn must be such as to indemnify him 
for this imposition. Here, then, it is evident that the 
excess of price beyond what cost of production requires 
— which excess of price goes to the government in the 
form of rent — is a result of the monojjoly of the land 
enjoyed by the state. 

Again, take the other case to which I have referred — 



process to be correct, can the theory v,'liich may be founded on them. 
We have here no ahernative but to assume the existence of a disturbing 
cause. In the case before us, e. 9., under whatever circumstances rent 
may be found to exist, this can never shake our faith in the facts that the 
soil of tlie country is not all equally fertile, and that the productive capac- 
ity of the best soil is limited ; nor weaken our confidence in the conclu- 
sions drawn from these facts that agricultural produce is raised at difier- 
ent costs, and that in the play of human interests this will lead to the pay- 
ment of rent to the proprietor of the superior natural agent. 



204 ^^^^ THEORY OF RENT. 

the case of rent paid for the worst lands under cultiva- 
tion ; or, a more extreme case still, the case of rent paid 
for the worst lands in the country, too poor for cultiva- 
tion of any kind. With respect to the former, it may 
perhaps he said that the payment of rent is more appar- 
ent than real. It rarely happens that the lands com- 
prised in one farm under one holding do not contain 
several varieties of soil. An average rent is struck over 
the whole, and the bad land appears to pay as much as 
the good. In point of fact, however, it is the extra profit 
derived from the better qualities of land that makes it 
worth while paying rent at all. The payment of rent 
on the inferior sorts is nominal merely ; so that we are 
justified in saying that virtually no rent is paid for 
such lands. 

It will be said, however, that rent of some kind is paid 
for every acre of land in Great Britain, however barren 
and worthless. This is true ; but where this is so, land 
is not taken as a commercial speculation. The rent 
which may be obtained for land too poor for cultivation 
is a consequence of the fact that land, even when not 
available as an instrument for the production of wealth, 
is still an object of desire as a means of enjoyment, and, 
being also limited in supply, becomes an article of wealth. 
Mountains in Wicklow and in the Highlands of Scot- 
laud, on which a barrel of oats could with difiiculty be 
raised, will nevertheless let at a good round rent as game- 
preserves ; and even w4iere there is not vegetation 
enough to shelter a hare or a grouse, such lands are yet 
not to be had for nothing, since, at the least, they minis- 
ter to the pride of proprietorship. In this case, as in 
that of the unoccupied lands of a colony, the rent which 



THE THEORY OF RENT. 205 

the Owner is enabled to exact is simpl}' a consequence of 
the monopoly which he enjoys. 

I have mentioned two cases of rent in which the phe- 
nomenon is not explicable on the theory of Ricardo. I 
shall now mention another — the case of the rent paid to 
the patentee of an invention for the nse of his patented 
process, where this process has superseded all others. 
Here the article produced is all produced at the same 
cost ; nevertheless the patentee is enabled to exact a 
rent for the hire of his invention. It is evident that the 
so-called rent, or value in excess of cost and profit, is due 
in this case to the same cause as in that just considered 
— namely, monopoly. There is indeed this limitation on 
the monopoly of a patentee, that the article to which his 
patent applies may still be produced in the ordinary 
way ; but, subject to this limitation, he has a strict mo- 
nopoly of the production of the article. He will conse- 
quently refuse to sell it except at such a price as shall 
leave him, not only ordinary profit, but a surplus value 
besides ; or, if he should not choose to engage in the pro- 
duction himself, he will not permit the patented process 
to be used except on condition that the person using it 
shall pay him some valuable consideration for its use, 
leaving it to the producer to indemnify himself in the 
price of the article. 

It thus appears that, besides the causes of rent em- 
braced in the theory of Ricardo, there is another — name- 
ly, monopoly — from which also the phenomenon may take 
its rise. When any of the agents or instruments indis- 
pensable to the production of an article is monopolized, 
the person in possession of the monopoly may refuse to 
allow tlie article to be produced, except on his own terms ; 



206 THE THEORY OF RENT. 

consequently, under such circumstances the article, what- 
ever it may be, will not be produced unless the price of 
it be sufficient to enable the producer to comply w^ith 
these terms, besides getting the ordinary remuneration 
for himself. 

§ 4. Perhaps it will here occur to some of my readers 
that the introduction of two distinct principles into the 
theory of rent involves an unnecessary complication ; 
and that — land being a monopolized article — the simple 
condition of monopoly in connection with the play of 
supply and demand would suffice to account for the 
phenomenon in all cases whatever. A little reflection, 
however, will show that such a generalization is not ad- 
missible. Agricultural rent, as it actually exists, is not 
a consequence of the monopoly of the soil, but of its di- 
minishing productiveness. If it were not for this latter 
condition, though rent might exist, it would, both as re- 
gards its amount and the laws of its rise and fall, be 
governed by principles w4iolly different from those whicli 
determine the actual phenomenon in its more familiar 
form. Further, it is a mistake to suppose that, in order 
to the existence of " economic rent," land should belong- 
to one class of persons, and be cultivated by another, or 
even that it should be a miarketable commodity. So 
long as land is not uniform in quality, and so long as 
its productiveness diminishes when its capacity of yield- 
ing produce has been forced beyond a certain point, so 
long agricultural products will be raised at different 
costs, and so long there will arise that surplus value in 
such products, over and above the average returns ob- 
tainable in other branches of industry, which, as I have 



THE THEORY OF RENT. 207 

shown, is tlie essence of " economic rent." For the ex- 
istence of rent, therefore, monopoly and the play of sup- 
ply and demand are not necessary; nor do they suffice 
to account for the phenomenon in the form in which we 
most commonly find it. 

As the causes determining rent in the ordinary case of 
agricultural rent are different from those which deter- 
mine it in the special cases to which I have called atten- 
tion, so also are the consequences in the distribution of 
wealth different in the two cases. In the ordinary case 
of agricultural rent, the relation of rent to price is not 
that of cause to effect, but of effect to cause ; rent, that 
is to sa}', is the consequence, not the cause of the high 
price of agricultural products. If, e. g., the property of 
landlords were confiscated, the price of corn would not 
be affected, since the price must still be sufficient to cover 
the expense of producing the portion of the general 
crop which is raised at greatest cost, and, as I have al- 
ready shown, it is not more than sufficient to do this 
at present. The effect of such a measure would not 
be to abolish "economic rent," but simply to transfer 
this element of value from the owners to the cultivators 
of land. 

On the other hand, in the special cases of rent refer- 
red to — in the case, e. g., of the unoccupied lands of a 
colony, rent is not the effect, but the cause of price. 
In Great Britain the price of corn rises hecause the 
government deinands a rent. In the ordinary case, 
the landlord demands a rent hecause the jprice of corn 
is high. If in the former case the government were 
to abandon its exactions, the price of corn would fall 
proportionally ; in the latter, tlie Iiigh price, not being 



208 THE THEORY OF RENT. 

due to tlie exactions of tlie landlord, would not be 
affected by tlieir abandonment. 

The same is true of all cases of rent, where rent is the 
consequence of monopoly, e. g., in the case of a patentee. 
The value of an article produced by a patented process 
is sufficient to afford a rent to the patentee after cover- 
ing the expenses and profits of the producer. But abol- 
ish the monopoly of the patentee, and the competition 
of producers would at once bring down the price by the 
amount of the rent; in other words, the surplus value 
would disappear ; and this is, in fact, what always hap- 
pens on the expiration of the term of a patent. 

But again, rent, according as it results from the prin- 
ciples noticed by Eicardo, or from monopoly, is govern- 
ed by different laws. With regard to the former phe- 
nomenon — what I may describe as " Ricardian" or "eco- 
nomic rent" — we can now have no difficulty in stating 
the conditions which determine its amount. As we have' 
seen, it consists in the surplus value appertaining to agri- 
cultural produce over and above what suffices to indem- 
nify the farmer for his outlay on the terms of remuner- 
ation current in the country. This surplus value mani- 
festly depends on two conditions : on the one hand on 
the price of agricultural produce, on the other on the 
quantity of such produce obtainable from a given area 
of land. We may, therefore, formulate the law of agri- 
cultural rent as follows : The price of agricultural prod- 
uce being given, agricultural rent — that is to say, the 
" economic rent " accruing from agricultural land — will 
vary directly with the productiveness of agricultural in- 
dustry — this productiveness being the function of two 
variables, viz., the natural fertility of the soil and tlie 



THE THEORY OF RENT. 209 

skill with M'liich labor is applied to it; or, tlie produc- 
tiveness of agricultural industry being given, rent will 
vary directly with the price of produce. 

On the other hand, rent, where it is a consequence of 
monopoly, depends simply on the demand for and supply 
of the article. The amount of rent which the English 
government may exact for unoccupied lands in Australia 
is controlled by nothing but its own will on the one hand, 
and on the other the strength of the desire and the abil- 
ity to purchase on the part of the colonists. In Great 
Britain consumers would be able and willing to pay 
ten times or twenty times the present price for bread 
rather than do without it ; and landlords, we may vent- 
ure to assume, would have little scruple about exact- 
ing higher rents, had they the power to do so ; but 
just as the Qompetition of farmers operates to enable 
landlords to appropriate that portion of the returns of 
land which is in excess of ordinary profit, so, on the 
other hand, the competition of landlords among them- 
selves renders the exaction of more than this impracti- 
cable. That landlords should be able to keep up the 
price of corn by holding out for higher rents would re- 
quire a combination of the whole body, which, without 
a law to enforce it, it would be impossible to carry into 
effect. But what landlords, from their number and ri- 
valry, are unable to do, government, wielding the con- 
centrated power of the community, has no difiiculty in 
doing. If, e. g., government chose to exclude foreign 
corn from a new colony, it might, by demanding a high- 
er rent, force up the price of corn to any point short of 
the extreme limit which consumers were able and will- 
ing io pay. Rent, therefore, is in such case governed 



210 THE THEORY OF RENT. 

not by the necessary cost or costs of producing corn, but 
simplj'- by the need and ability to purchase of the con- 
sumer on the one hand, and by the disposition of the 
owner of the natiiral agent on the other — or, according 
to the usual phraseology, by demand and supply. 

"VVe have arrived, therefore, at the following conclu- 
sions : Agricultural rent, to Avhich alone the theory pro- 
pounded by Eicardo is applicable, differs from the other 
cases to which I have adverted — first, with reference to 
its cause : the cause of agricultural rent being the differ- 
ent costs at which agricultural produce is raised, while 
the other cases of rent are due to the principle of mo- 
nopoly ; secondly, it differs in the consequences to which 
it leads : agricultural rent having no effect upon price, 
while the rent that results from monopoly leads to a 
rise of price in proportion to the rent ; and, thirdly, it 
differs in the laws by wliich it is governed: the rent 
vvdiich results from monopoly being governed, like other 
cases of monopoly, solely by the principles of demand 
and supply, while the rise and fall of agricultural rent 
depend on the relation between the productiveness of ag- 
ricultural industry and the price of agricultural produce. 

It is most important to observe the distinction between 
these two phenomena of rent, to the confusion between 
wliich the objections which have been advanced by va- 
rious writers against the tlieory of E-icardo owe what- 
ever plausibility they possess. So important indeed is 
the distinction that, were we framing a new nomenclat- 
ure of Political Economy, I should prefer confining the 
term rent to the case of agricultural rent, as contemplat- 
ed by Eicardo, considering those other cases of rent 
which are tlie consequences of monopoly as coming 



THE THEORY OF EEXT. 211 

under tlie head of taxes on coniniodities, to wliicli they 
are strictly analogous. In a certain sense, the sovereign 
authority of the state may be said to have a monopoly 
of every article of production, inasmuch as it may refuse 
to permit its production except upon such conditions as 
in its sovereign pleasure it chooses to enact. The British 
government, e. (/., imposes a tax upon malt, and refuses to 
allow malt to be made except on condition that for every 
bushel of barley malted a certain sum be paid into the ex- 
chequer. The consequence is that the price of malt rises 
to such a point as is sufhcient not only to cover the ex- 
penses and profits of production, but to leave over and 
above a surplus value which goes to the government as 
the malt-tax. If government were to raise the tax high- 
er, the price would rise higher ; if it were to abolish the 
tax, the price would fall proportionally. It is evident 
this is in all respects analogous to the case of a rent on 
the unoccupied lands of Australia, and is attended with 
consequences of precisely the same kind. The revenue 
derived from this source, therefore, would be more prop- 
erly considered as a tax on raw produce than as rent. 
In the same way, the rent derived from a patented proc- 
ess has all the attributes of a tax. It springs from the 
monopoly of the patentee ; it is regulated by his discre- 
tion ; and it constitutes an addition to the natural price 
of the article. The word " tax," however, is generally 
confined to the exactions of the state ; and the laxity 
with which the term " rent" is applied to every form of 
revenue derived from articles let to hire is probably too 
inveterate to be corrected. It is all the more important, 
therefore, that the distinction in facts should be careful- 
ly noted. 



212 THE THEORY OF RENT. 

§ 5. In tlie opening of the present observations I call- 
ed attention to the ground of objection taken by Mr. 
Rickards to the doctrines which I have been examining 
in this and the last lecture, viz., that they " both rest 
upon the same assumption — that of diminishing produc- 
tiveness of the land as compared' with the undiminished 
power of human fecundity." My object in recurring 
to this question now is not to offer any further arguments 
in support of a position which I conceive has been al- 
ready sufficiently established, but to avail myself of the 
reasoning of Mr. Kickards in illustration of what it has 
been the object of these lectures to prove — viz., the influ- 
ence whicli mistaken views of the character and method 
of economic science have exercised in producing those 
discrepancies of opinion in relation to fundamental doc- 
trines to which I adverted in the outset. 

Mr. Rickards denies that " the diminishing productive- 
ness of agricultural industry" is a fundamental econom- 
ic law ; and having quoted Mr. Mill's statement of the 
law, with his explanation that it is constantly neutralized 
in a greater or less degree by " an antagonizing princi- 
ple " designated by Mr. Mill " the progress of civiliza- 
tion," proceeds to remark :' 

" With regard to the alleged law of production, herald- 
ed forth by this author as ' the most important proposition 
in Political Economy,' I confess myself unable to under- 
stand on what foundation it is supposed to rest. A laio 
of the social sj^stem, if I rightly understand the expression, 
can only be deduced from ascertained facts ; it is a rule 
founded on a plurality of instances to the same effect. 
We are entitled, therefore, to ask. When and where has 

' "Fopulation and Capital," pp. 13.'), 130', 137. 



THE THEORY OF RENT. 213 

such a law been found iu operation ? What perlorl or 
-what country can be referred to in which tlie rule has been 
or is now iu force ? Certainly it does not hold good iu 
England — a country where, undoubtedly, though there is 
still great room for improvement, 'men have applied 
themselves to cultivation with some energy, and have 
brought to it some tolerable tools;' a country, too, iu 
Avhich the peculiar density of its j^opulation operates con- 
stantly to bring fresh soils into cultivation. But in En- 
gland it seems to be admitted, or, at all events, it can be 
abundantly proved, that if we take any two periods suffi- 
ciently distant to aflbrd a fair test, whether 50 or 100 or 
500 years, the productiveness of the land relatively to the 
labor employed upon it has progressively become greater 
and greater. . . . But the manner in which Mr. Mill ac- 
counts for the admitted aberrations from his supposed law 
of production presents to my mind still greater difficulties. 
The law, according to him, is counteracted, or suspended 
by an agency which is 'in habitual antagonism' to it; 
and this agency is, in brief phrase, 'the progress of civili- 
zation.' Are, then, the only exemplifications of this 'law' 
to be found in countries in which civilization is not ad- 
vancing ? Is the law one which never co-exists with a 
state of social progress ? But, surely, it is such a ,state as 
this that all our reasonings, as political economists, presup- 
pose ; this is ' the natural course of things,' as Mr. Sen- 
ior justly says, 'for it is the course for which nature has 
fitted us.' Suppose civilization not advancing, and all 
those phenomena of the social system which economists 
have studied and described become reversed — population 
falls ofl", combination of labor gives place to isolation, ma- 
chinery to manual toil, communications are cut off, ex- 
change is impeded, and labor of every kind, not only agri- 
cultural but manufacturing also, becomes less and less pro- 
ductive. This is, no doubt, true; but this can hardly be 
M'hat Mr. Mill means by 'the most important proposition 
in Political Economy,' for it is one which operates only in 
an abnormal state of human affairs, and gives place to a 



214 THE THEORY OF RENT. 

converse rule whenever the manifest design of Providence 
and destiny of our species are fulfilled — that is, by the prog- 
ress of civilization. It is that progress which, by its man- 
ifold effects and influences, direct and indirect, as set forth 
by Mr. Mill himself, tends to confer, as wealth and num- 
bers multiply, an increasing productiveness both on the 
soil and on every other field of human industry. This is, 
indeed, a ' law ' which, so far as experience hitherto in- 
forms us, has never failed to operate, and of which we 
may, therefore, reasonably infer that its beneficient opera- 
tion is still likely to continue." 

Mr. Rickards's conception of " an economic law " is, 
as appears from this passage, something essentially dif- 
ferent from that of Mr. Mill, and, as might be expected, 
the views of these economists as to the kind of evidence 
applicable to the proof of such a law are equally at va- 
riance. 

An "economic law," according to Mr. Mill's view, 
represents the influence wliicli a particular cause (in 
the present instance, the physical character of the soil) 
exerts on some of the phenomena of wealth ; and, agree- 
ably with this view, bis method of establishing the law 
consists in a reference to facts which prove the phys- 
ical character in question, and then in reasoning on the 
premises thus obtained. According to Mr. Eickards, on 
the other hand, an '• economic law " is not an assertion 
respecting the influence of any one cause, or even the 
combined influence of any number of know^n and def- 
inite causes, but a statement of the order in "whicli 
events have actually taken place — these events being 
the result of a vast variety of causes, more or less or 
not at all known ; and this being his conception of an 
economic law, he naturally has recourse to history or 



THE THEORY OF RENT. 215 

statistical tables in order to establish it. The one is a 
statement respecting a tendency now existing, the nlti- 
niate proof of -which is to be sought in the character 
of man or in physical nature : the other is a statement 
respecting an historical fact, and, as such, must of course 
ultimately rest upon documentary evidence. In what- 
ever sense, therefore, each may be determined, it is 
plain that neither can be taken iu refutation of the 
other, since it merely amounts to the assertion of a 
M-holly different proposition. In deciding, therefore, 
between Mr. Richards and Mr. Mill, we have to con- 
sider, not which proposition is true, for there is nothing 
incompatible in the two doctrines, but which, regard 
being had to the ends of Political Economy — the ex- 
planation of the phenomena of wealth — is to the pur- 
pose. 

ISTow touching that " law," " which, so far as expe- 
rience hitherto informs us, has never failed to operate " 
(so says Mr. Richards) — " the progress of civilization " 
— it is obvious that, as I observed when repljung to the 
same argument on a former occasion,' such a state- 
ment affords no explanation of any phenomenon con- 
nected with the production and distribution of wealth, 
but is itself the expression of a complex and difficult 
phenomenon which it is the business of the political 
economist to explain. To bring forward this as a iinal 
result in economic speculation — to deprecate all anal- 
ysis of the causes on which the so-called " law " depends 
(and this is what Mr. Rickards's argument would re- 
quire) — is simply to abandon all pretensions to solving 

' See ante, p. 1 80. 



216 THE THEORY OF RENT. 

tlie problems of wealth — is to give up at once the 
cause of Political Economy as a branch of scientific 
research. 

On the other hand, the influence of the physical qual- 
ities of the soil, as expressed by the law of its diminish- 
ing productiveness in Mr. Mill's sense, is a principle 
most important with reference to the objects of Polit- 
ical Economy, and quite essential in enabling us to un- 
derstand the actual phenomena presented by agricult- 
ural industry — a principle which, taken in conjunction 
with the various agencies included under the expres- 
sion ''progress of civilization," explains, among other 
things, that general tendency to a fall of profits and 
rise of rent, which, though frequently and sometimes 
for long periods interrupted, is nevertheless one of the 
most striking circumstances connected with the mate- 
rial interests of advancing communities. It is to be 
observed that there is nothing in what I have quoted 
from Mr. Rickards, nor, I may add, in any part of his 
work, which can properly be said to impugn the cor- 
rectness of this explanation. In terms, indeed, he de- 
nies some of the propositions on which it is founded, 
but in terms only ; when we come to examine his mean- 
ing, we find that it has reference to a wholly distinct 
question. His remarks, so far as they are pertinent, 
consist in an attempt to ridicule the idea of any expla- 
nation. 

"Mr. Mill's law," he says, "has not yet come into 
operation." * And why ? Because, forsooth, it has 
been counteracted by a law of an opposite tendency. 

' Pajre 141. 



THE THEORY OF RENT. 217 

" It lias been postponed (to saj the least) by the liabit- 
ual antagonism of various causes." I am most anx- 
ious not to misrepresent Mr. Rickards, but it appears 
to me that the only possible inference to be drawn 
from this lano-uage is that he refuses to admit the ex- 
istence of a law or tendency unless the operation of 
this law be perfectly free from all obstructing or coun- 
tei-acting influences ; in short, that he regards the mut- 
ual counteraction of opposing forces as an amusing but 
unsubstantial fiction of philosophers. 

It is scarcely necessary to say that such views go di- 
rectly to impugn the vrliole received system of induc- 
tive philosophy. If, for example, such objections are 
to be listened to, how is the iirst law of motion to be 
established ? The objector might say, " When and 
where has such a law been found in operation ? cer- 
tainly it does not hold good in England." So far from 
its being true that a projectile once set in motion wnll 
proceed forever in the same direction with unimpaired 
velocity, we know that the best minie riiie will not send 
a ball more than a couple of miles, and that it is almost 
immediately bent out of its direct course into one 
nearly resembling a parabola. " Does the law of mo- 
tion only operate in an abnormal state of human af- 
fairs?" If the physical philosopher were to explain 
that the natural tendency of the law was "habitually 
counteracted" by the antagonizing force of gravity, he 
would be met by the retort that this mode of account- 
ing for " the admitted aberrations from the supposed 
law presented to the mind still greater difficulties." 
The law of motion, according to the physical philos- 
opher, "is counteracted or suspended by an agency 

K 



218 THE THEORY OF RENT. 

whicli is ill habitual antagonism, and tliis agency is, in 
brief phrase," the law of gravitation. "Are then the 
only exemplifications of this law to be found in coun- 
tries in which" the law of gravitation does not exist ? 

It is, I say, scarcely necessary to insist that such a 
line of reasoning is wholly inconsistent with the re- 
ceived logic of the inductive sciences ; and, if admit- 
ted, the structure must fall. The diagonal of a paral- 
lelogram must no longer stand for the resultant of the 
forces represented by the sides. The facts of the as- 
cent of a balloon through the air, of the rise of the 
mercury in the Torricellian tube, must be considered 
as a " refutation " of the law of gravity ; the gyrations 
of a boomerang as a disproof of the first law of mo- 
tion. The neutral salt, just because it is neutral, no 
longer contains the acid. Friction has no existence 
and no effect, because it does not bring the vehicle to 
a stop. The advance of a ship against wind and tide 
is a proof that there is no wind or tide. The progress 
of the world in civilization is a proof that there are no 
passions in human nature, and no laws in the physical 
world which tend to impede it. In short, the notion of 
"habitual antagonisms" is to be at once exploded. 
The attempt to resolve complex uniformities into sim- 
ple principles — in Baconian language, " the interpi-e- 
tation of nature" — is to be abandoned, and we are 
henceforward to content ourselves with the rough sta- 
tistical results. 

According to the views here indicated o£ the char- 
acter and method of the science. Political Economy 
is plainly identical with the statistics of wealth and 
population, and this is a view of Political Economy 



THE THEORY OF RE XT. 219 

which is probably widely entertained, and, for aiiglit 
I know, may include some Professors among its sup- 
porters. If this view, however, is to be accepted, the 
pretensions of the study, as a means of analyzing and 
explaining the causes and laws of which the facts pre- 
sented by statistical records are but the result, must be 
given np. "We may indeed give to the empirical gen- 
eralizations which are to be found at the bottom of our 
statistical tables, and which are "founded on a plu- 
rality of instances to the same effect," the sounding- 
title of " laws of our social system ;" but if such em- 
pirical generalizations are to be regarded as ultimate 
facts, if every attempt at further analysis is to be met 
by ridicule of the idea of causes being in " habitual an- 
tagonism,-' and by simple re-assertion of the complex 
phenomenon to be explained, then, however we may 
persist in retaining the forms and phrases of science, 
the scientific character of the study is gone ; and Po- 
litical Economy has no longer any claim to be admit- 
ted among those departments of knowledge of which 
the business is not only to observe, but to interpret 
nature. 

It appears to me, however, that there is nothing in the 
phenomena of wealth w^hich takes them ont of the cate- 
gory of facts in explanation of which the method of 
analysis and deductive reasoning may be applied. I 
have endeavored to show that while on the one hand we 
labor under much disadvantage, as compared with those 
w^ho investigate physical phenomena, in being precluded 
from experiment, and in having to deal with facts of an 
extremely complex and fluctuating character ; on the 
other hand we possess peculiar advantages in deriving 



220 I'^^E THEORY OF RENT. 

our premises eitlier directly from our consciousness, or 
from physical facts easily ascertainable, instead of be- 
ing obliged to elicit them by long and intricate courses 
of inductive reasoning. It has been by following the 
method indicated in this view of the problems of w^ealtli 
that such truths as Political Economy has yet brought 
to light have been established; and by steadily prosecut- 
ing our inquiries iu the same direction by the same 
road, I, for one, feel confident that most of the difFici]l- 
ties whicli now beset economic questions may be over- 
come, and that still more important truths may be dis- 
covered." 



' I may, perhaps, be permitted to refer to my Essay, ' ' Political Economy 
and Land" — in the volume "Essays in Political Economy, Theoretical 
and Applied" — for a discussion of some aspects of the problem of rent not 
treated in the foregoing lecture, and in particular for an examination of the 
effects of different social conditions in causing a divergence of the actual 
rent paid by cultivators from the " economic rent" as defined by the the- 
oi-y of E'cardo. 



APPENDICES. 



APPENDICES. 



APPENDIX A. 

If, not confining myself to economists of established position 
and reputation, I were to include every writer on economic ques- 
tions, there is not a single doctrine within the range of the science 
that could be said to be undisputed. A late writer (1857), e. g., 
Mr. Macleod, in a work entitled " The Theory and Practice of 
Banking," proposes to make a complete talula rasa of Political 
Economy (which he considers as " almost a branch of mechan- 
ics ;■' — " all sciences," he tells us, being " questions of force and 
motion "), and to reconstruct it, taking as its basis certain notions 
of credit and capital, which he claims to be the first to have 
evolved, and his title to the discovery of which will probably pass 
unchallenged. This writer thus delivers himself: "We do not 
hesitate to say that there is not a single writer on Political Econ- 
omy who has given a correct account of them [the laws of wealth] ; 
and more especially what has been written lately is the result of 
the most extraordinary misconception of the nature of the thing, 
the most profound ignorance of the details of business clothed 
in language so palpably self-contradictory and inaccurate as to 
excite nothing but surprise" (vol. ii.. Introduction, p. Iviii.). . . . 
" The time has come when all Political Economy jiust be re- 
written. Every error in thought and language, which confused 
and retarded all the other inductive sciences, now deforms and ob- 
scures monetary science. There is hardly an expression in com- 
mon use among writers on the subject wliich is not totally erro- 
neous" (p. Ixxx.). 

The weapons by which Mr. Macleod proposes to demolish the 
present edifice of the science would seem to be vituperative epi- 
thets. Here are a few examples of his method. Ricardo's theory 



224 APPENDIX A. 

of rent he brands as a "prodigious delusion." Mr. Mill's nomen- 
clature implies " the most ludicrous misconception," etc. Of the 
doctrine that cost of production regulates value, he says that " no 
more stupendous philosoj)hical blunder ever infected the princi- 
ples of any science." In the next sentence it is called a " tremen- 
dous fallacy," and further on a " pestilent heresy." Mr. Tooke's 
distinction between currency and capital exhibits " a profound 
misconception of the whole nature of monetary science — " . . . 
" one of the most profound delusions that ever existed." A pas- 
sage quoted from Colonel Torrens is " nothing but a series of blun- 
ders and absurdities ;" his statements are " simply ridiculous ;" 
while in another place he confounds together in one sweeping 
category " Mr. Eicardo, Mr. McCulloch, Mr. John S. Mill, Mr. Sam- 
uel Jones Loyd, Colonel Torrens, Mr. Norman, Sir Robert Peel, and 
Sir Archibald Alison," as the propounders of every species of log- 
ical fallacy. 

The cause of the failure of Political Economy hitherto, Mr. Mac- 
leod tells us, is " that no vv'riter who has yet handled it possessed 
the indispensable qualifications for success." These qualifications 
the writer then not obscurely hints have been incarnated for the 
first time in the person of the author of" The Theory and Practice 
of Banking." Among the requisites for success, one would imag- 
ine a competency to write the English language, and a capacity 
to understand the views of previous writers before denouncing 
them, would be included. How far these are included among 
Mr. Macleod's qualifications the reader may judge from the fol- 
lowing examples. 

First, to take a specimen of this author's defining power. " Cap- 
ital," he tells us, "is the circulating power of commodities" (vol. 
ii., Introduction, p. xlvii.). When Mr. Macleod tells us elsewhere 
that "the object and function of capital is to circulate commodi- 
ties," he uses language which, however objectionable and repug- 
nant alike to scientific requirement and to popular usage, has at 
least the merit of being intelligible. Again, when he says that 
" caj)ital and credit constitute the circulating medium," though 
the expression implies a fundamental misconception of the nature 
of the agencies in question, we may yet guess at what he means. 
Eut when he says that " capital is the circulating power of com- 



APPEXDIX A. 225 

modities," if he does not mean to attribute to commodities a fac- 
ulty of locomotion, he uses language which is capable of convey- 
ing no idea whatever ; yet this, he tells us, is " the original primary 
and genuine sense of capital " as distinguished from " the second- 
ary or metaphorical sense." Let us suppose that Mr. Macleod 
meant by the expression, " circulating power of commodities," 
what assuredly the language does not convey, viz., the power 
which circulates commodities, even this will not help him. From 
his remarks elsewhere it is plain that he meant to designate money 
and credit. Now money and credit are not the j)oicer which cir- 
culates commodities, any more than air is the power which trans- 
mits sounds, or language the power which communicates ideas. 
The power which performs all these things is the human will ; 
money and credit in the one case, air and language in the other, 
being the media or instruments by which the several ends are ac- 
complished. But, without entering into the metaphysical ques- 
tion, let us ask what would be thought of a Avriter who should 
describe air as " the transmitting power of sounds," or language 
as " the communicating power of ideas ?" 

Take another example of Mr. Macleod's scientific precision. He 
thus lays down the criterion of a true principle, '■'■Every true for- 
mula^ or general rule, must lear on the face of it all the elements which 
influence its action'' (p. Ixv.), i. c, which influence the action of the 
formula ! One may guess at the idea which Mr. Macleod intends 
to express ; but the words as they stand are destitute of meaning. 
Take another case. In p. Ixi., etc., Mr. Macleod objects to the 
law of " cost of production regulating value," because it is inap- 
plicable to " all cases where the same cost of production produces 
articles of different qualities." Will Mr. Macleod inform us how 
"cost of production" can "produce articles?" In another pas- 
sage he writes thus, " Alone of all the political sciences, its phe- 
nomena [i. e., the phenomena of monetary science] may be express- 
ed with the unerring certainty of the other laws of nature " (p. 
xxxv.). If I may venture to conjecture the meaning of this re- 
markable passage (which has a curiously Hibernian ring about it), 
possibly what Mr. Macleod meaiit to say was that the phenomena 
of monetary science may be expressed with the same unerring 
certainty as the phenomepa of the other inductive sciences— a 

K i^ 



220 APPENDIX A. 

thought, one would imagine, -wliicli might be conveyed without 
severely taxing the resources of the English tongue. 

These are a few specimens, and by no means unfavorable ones, 
of Mr. Macleod's ordinary scientific style ; ^ they are taken, it will 
be observed, from that portion of his work in which accuracy of 
expression would be found, if it were to be found at all — namely, 
from his definitions and statements of general princij)les. 

I have called attention to them, not only because of the impor- 
tance of accuracy of thought and language in economic discussion, 
but because this writer, not content with pronouncing a general 
and sweeping condemnation on all preceding writers on Political 
Economy, has singled out for special denunciation their defects 
in regard to precision of language, a quality on which it is evi- 
dent he peculiarly Talues himself. Thus his anger passes all 
bounds against Mr. Mill, because that author states at the open- 
ing of his treatise that it is no part of his design " to aim at 
metaphysical nicety of definition, when the ideas suggested by a 

^ As a specimen of his style when he is less restrained by scientific con- 
siderations, take the following : " Some Political Economists pretend that 
the rules of the science are not applicable to extreme cases. An extreme- 
ly convenient cover for ignorance, truly ! Such arguments only prove 
the incapacity of those who use them. If an architect had miscalculated 
the strength of the materials of his columns, and his building came tum- 
bling down, and he were to run about, crying out, ' It is an extreme 
case; the laws of mechanics do not apply to it!' the world would set 
him down as a fool. If an engineer, whose boiler was to burst from bad 
workmanship, were to say that it was an extreme case, and that the laws 
of heat did not apply to it, he would be set down as a fool. In both these 
cases people would say that the architect and the engineer did not pay 
sufficient attention to the laws of nature. They would not say that the 
laws of nature paled before the incompetence of man. Those Political 
Economists who say that the laws of their science are not applicable to 
extreme cases are just like such an architect or such an engineer. Such 
a docti'ine is the mere cloak of their own incompetence and ignorance. 
A false theory may account well enough for a particular case, like an en- 
gine may be at rest whose piston is crooked, whose wheels and cranks 
are all out of order. But the test of a well-finished engine is to work 
smoothly; it must be set in motion to test it properly. Just so with a 
theory; it must be worked — it must be set in motion. If it be true, 
like a well-fitting engine, it will work smoothly, it will explain all phe- 
nomena in the science ; if it be not true, like a badly fitting engine it will 
crack, split, break in all directions. 

"Mr. Macaulay has used a similar line of argument with great skill 
and eflTect," etc. 



APPENDIX A. 227 

term are already as determinate as practical purposes require." 
For this Mr. Mill is charged with deliberately adopting " all the 
loose phraseology of the public " — with seeking to " found a sys- 
tem on the loose babble of common talk." After the few samples 
given above, probably most readers will prefer the laxity of Mr. 
Mill to the rigid accuracy of Mr, Macleod. Mallem, mehercxde, er- 
rare cum Platone. 

But a word with regard to Mr. Macleod's capacity of under- 
standing the authors whose writings he treats so contem^jtuously. 
A large portion of the introduction to his second volume is de- 
voted to an attemjit to controvert the received doctrine, which at- 
tributes to " cost of i^roductiou" a governing influence on the val- 
ue of certain classes of commodities. " Political Economy," he 
says^ " can never advance a step until this arch-heresy be utterly 
rooted out." Well, what is his contradiction of the " arch-here- 
sy ?" Here it is, given in capitals : " Value does not sprikg from 

THE LABOR OF THE PRODUCER, BUT FROM THE DESIRE OF THE CON- 
SUMER. To allege that value sjiriugs from the labor of the pro- 
ducer is exactly an analogous error in Political Economy to the 
doctrine of the fixity of the earth in Astronomy" (p. Ixiv.). 

Granting that the analogy is perfect (though, for one, I am un- 
able to perceive it), will Mr. Macleod inform us who has said that 
"value springs from the labor of the producer?" His so-called 
" refutation " was more particularly addressed to the ^iews of Mr. 
Ricardo and Mr. IMill. In the second paragraph of Mr. Ricardo's 
great work, he writes as follows : " Utility, then, is not the measure 
of exchangeable value, although it is essential to it. If a commod- 
ity were in no way useful — in other words, if it could in no way 
contribute to our gratification — it would be destitute of exchange- 
able value, however scarce it might be, or whatever quantity of la- 
lor might le necessary to 2^rocure it.'''' The first sentence in Mr. Mill's 
chapter " On Demand and Supply in their Relation to Value" is as 
follows : " That a thing may have any value in exchange, two con- 
ditions are necessary. It must ie of some use — that is, it must con- 
duce to some purpose, satisfy some desire. But, secondly, the thing 
must not only have some utility, there must also be some difficulty 
in its attainment." 

Mr. Macleod's refutation of the doctrine that " cost of production 



228 APPENDIX A. 

regulates value " is, tlaerefore, simply a refutation of liis own ex- 
travagant misconception of it. If any further evidence be neces- 
sary to show this, take the following passage, in which an objec- 
tion is taken to the ordinary limitation which is given to this 
doctrine — " because for it to indicate price correctly, even in that 
one instance, it requires this essential qualification, that the supply 
should be unlimited " (p. Ixi.). Now if the supply were " unlimit- 
ed," the article could have no exchange value whatever. What 
the authors who have maintained this doctrine have stated, and 
what possibly Mr. Macleod intended to say, was that the articles, 
of which the value is regulated by cost of production, are only 
those which may be freely produced in any quantity required ; 
but Mr. Macleod can see no distinction between this and an " un- 
limited supply." 

"When a writer thus shows an entire inability to comprehend 
the meaning of authors of such remarkable perspicuity and power 
of expression as Mr. Kicardo and Mr. Mill (for I will not suppose 
that he intentionally misrepresents them), his competency for the 
task he has undertaken of reconstructing the science of Political 
Economy, may be imagined. It is, of course, unnecessary to no- 
tice his " arguments " in refutation of the doctrine in question. 
It will be time enough to do so when he shows that he under- 
stands the principle he assails. 



APPENDIX B. 

The limits of economic investigation contended for in tlie text, 
though, as has been seen, not in keeping with the theories of some 
distinguished economists, have, in the actual development of the 
science, been all but universally observed. As a rule, eveiy econ- 
omist, so soon as an economic fact has been traced to a mental 
principle, considers the question solved, so far as the science of 
wealth is concerned ; just as he considers it equally solved when 
he has traced such a fact to a physical principle. Though Adam 
Smith has not formally discussed the question, his view may be 
inferred from the following passage : " The division of labor from 
which so many advantages are derived is not originally the ef- 
fect of any human wisdom which foresees and intends that gener- 
al opulence to which it gives occasion. It is the necessary though 
very slow and gradual consequence of a certain propensity in hu- 
man nature which has in view no such extensive utility — the pro- 
pensity to truck, barter, and exchange one thing for another. 
Whether this propensity be one of those original principles in 
human nature, of which no further account can be given, or 
whether, as seems more probable, it be the necessary consequence 
of the faculties of reason and speech, it telongs not to the present 
suliject to inquire'''' ("Wealth of Nations," book 1. chap. ii.). In 
other words, he distinctly declines to "explain the laws of mind" 
under which division of labor takes place ; regarding them as 
facts not to be explained, but to be taken notice of and reasoned 
upon, in precisely the same way as in a subsequent chapter he no- 
tices the physical qualities of the precious metals — their portabil- 
ity, durability, divisibility, etc. — as i:»hysical facts to be taken ac- 
count of, in order to understand the general adoi:)tion of them 
for the purposes of money. He no more attempts to explain the 
mental principles which lead to division of labor than he at- 



230 APPENDIX B. 

tempts to explain the physical principles which render the pre- 
cious metals suitable as a medium of exchange. In both cases, 
in the language of Mr. Senior, " he is satisfied with stating their 
existence." 

The only writer, so far as I know, who has, in practice, tran- 
scended the limits indicated and observed by Adam Smith, is 
Mr. Jennings in -his " Natural Elements of Political Economy." 
Not content with assuming mental principles as premises to be 
reasoned upon, in the same way as physical principles are as- 
sumed and reasoned upon, Mr. Jennings regards the explanation 
of the laws of mind as coming properly within the province of 
the political economist ; and, agreeably with this view, his book 
is devoted to an analysis of the principles of human nature, psy- 
chological and physiological, which are brought into action in 
the pursuit of wealth. Thus, having resolved the operations of 
industry into certain movements of muscles and nerve-fibre, he 
proceeds "to inquire what is the modus operandi of the mental 
influence which actuates these organic instruments ;" and this 
modus operandi having been analyzed, and the mental elements 
of the process ascertained, he makes these the basis of the divi- 
sion of industrial actions. These he divides as follows, viz. : first- 
ly, those which are " marked simply by the law of former co-exist- 
ence " — of which he gives the examples of " digging, threshing, 
rowing, sawing," etc. ; secondly, those which are " marked by 
the application of judgment to the merely memorial trains of 
thought," e. g., those of " superintendents, insj)ectors," etc. ; third- 
ly, those which are " marked by the application of the law of re- 
semblance to those processes of thought," e. ^7., those of "painters 
and sculptors ;" and, fourthly, those which are " marked by the 
further application of judgment to resemblance," e. g., those of 
"judges, legislators," etc. (pp. 115 to 117). 

Hitherto the nomenclature of Political Economy has been 
framed with reference to the phenomena of wealth, or the mode 
of its production and distribution. Mr. Jennings, taking a differ- 
ent view of the nature of economic science, defines and classifies 
on wholly difierent principles. Thus, " consumption " he defines 
as " that class of human actions in which the instrumentality of 
the afferent trunks of nerve-fibre is iDrcdorainant." The sensa- 



APPEXDIX B. 231 

tions wliicli attend upon consumption, again, he divides " into 
two classes, according as tliey are conveyed by the nerves of com- 
mon sensation, or by the nerves of special sensation." In the for- 
mer class are comprised " sensations of resistance," of " tempera- 
ture," ..." sensations consequent on the gratification of appetite," 
etc. In the latter, viz., those conveyed by nerves of special sen- 
sation, are included the charms of " color, of " form," and of 
" sound ;" . . . " the luscious taste which the palate derives from 
elaborate substances, in which sapid properties are joined with 
congenial odors, and diffused through substances agreeable to the 
touch." 

If Political Economy is to be treated in this way, it is evident 
it will soon become a wholly different study from that which the 
world has hitherto known it. It is undoubtedly true, as Mr. 
Jennings remarks in his preface, that the subject-matter of Polit- 
ical Economy represents the complex result of mechanical, chem- 
ical, physiological, and biological law^s, together with the laws of 
mental and political philosojjhy ; but I can not think that it fol- 
lows from this that " eacli of the more complex of these subjects, 
being governed by all the laws which govern every subject of in- 
ferior complexity, in addition to its own peculiar laws, ought not 
to be examined until the difficulties which surround each of 
these less comi)lex subjects have been surmounted progressively 
and seriatim." Were this rule rigorously enforced, and were no 
one to be allowed to matriculate as a political economist till he 
had mastered all the less complex sciences, including mechanics, 
fistronomy, chemistry, magnetism, electricity, general physics, phys- 
iology, biology, together with mental and political philosophy, 
the practice would certainly be attended with the advantage of 
effecting a very extensive reduction in the economic ranks ; if, 
indeed, with the exception of Mr. Jennings himself, any should 
be found capable of passing the terrible ordeal. But I confess 
that I am quite unable to see the necessity of making such im- 
possible demands upon the human intellect. Surely, to recur to 
the example taken from Adam Smith, it is possible to j)erceive 
that division of labor and exchange facilitate the production of 
wealth, without deciding whether the disposition which leads to 
this course of conduct be an original or derived faculty ; or to 



232 - APPENDIX B. 

understand the advantages which the precious metals offer as a 
measure of value and medium of exchange, though we may be 
wholly ignorant whether they are simple or complex substances, 
or appear at the positive or negative pole of the battery. Or, to 
take an example from Mr. Jennings's book, I confess I am quite 
unable to see what new light is thrown upon the causes which 
determine the laborer's condition, by his telling us that during 
" production the instrumentality of the efferent trunks of nerve- 
fibre is predominant," while during " consumption " it is " the 
afferent trunks of nerve-fibre which prevail." So long as the re- 
sult is the same, so long as human beings possess the same ener- 
gies, require the same subsistence, and are influenced by the same 
motives, the economic laws of wages will be the same, though 
they had neither "afferent" nor "efferent" trunks of nerve-fibre 
in their bodies. Even were the encyclopaedic knowledge de- 
manded by Mr. Jennings easily attainable, it appears to me that 
nothing but confusion and error could arise from extending eco- 
nomic inquiry beyond the limits which have hitherto been ob- 
served.- Take, e. g., the division of industrial operations which I 
have quoted above from Mr. Jennings, founded upon his analysis 
of the mental principles engaged — what is the economic value of 
this classification ? What light does it throw on the phenomena 
and laws of wealth ? Mr. Jennings places in the same class of 
" industrial operators" judges and legislators, because the actions 
in which they engage are "marked by the application of judg- 
ment and resemblance to the merely memorial trains of thought ;" 
but, economically considered, if it be desirable to class them at 
all, judges are far more widely separated from legislators than 
from " superintendents," or from " diggers, threshers, rowers, or 
sawyers," who are placed in distinct classes ; judges being highly 
paid officers, while legislators (at least in Great Britain), instead 
of being paid, are obliged to pay handsomely to be allowed to 
exercise their functions. If a judge be paid more highly than a 
digger, it is not because the exercise of the functions of the latter 
involve only " memorial trains of thought," while the exercise of 
those of the former involve besides the faculties of judgment and 
of perceiving analogies — this, economically considered, being an 
accident ; but because the persons who are qualified to perform 



APPENDIX B. 233 

the fuiictious of a judge are much fewer than those wlio are 
qualified to dig ; and the reason the former are niore scarce is 
jDartly because the requisite natural faculties are more rare, and 
partly because the expense necessary to their due cultivation is 
considerable. 

Classification will, I presume, be more or less perfect in propor- 
tion as it is founded upon those qualities in the objects of it 
Avhich, with reference to the ends of the science, are essential ; but 
a classification based upon an analysis of the psychological or phys- 
iological operations which take place in the production or dis- 
tribution of wealth will not divide producers or distributors ac- 
cording to their economic importance, but according to circum- 
stances which, economically considered, are purely accidental. 



APPENDIX C. 

The following passage from Dr. Whewell's " History of the In- 
ductive Sciences " contains so elegant an example of the logical 
process by which the great generalizations in physical science are 
established, that, with a view to illustrate some occasional refer- 
ences to the line of reasoning pursued in physical investigations 
which occur in the text, I am induced to extract it : 

" When we look at the history of the emission-theory of light, 
we see exactly what we may consider as the natural course of 
things in the career of a false theory. Such a theory may, to a 
certain extent, explain the phenomena which it was at first con- 
trived to meet ; but every new class of facts requires a new sup- 
position — an addition to the machinery ; and as observation goes 
on, these incoherent appendages accumulate, till they overwhelm 
and upset the original frame-work. Such w^ as the history of the 
hypothesis of solid epicycles ; such has been the history of the 
hypothesis of the material emission of light. In its simple form, 
it explained reflection and refraction ; but the colors of thin plates 
added to it the hypothesis of fits of easy transmission and reflec- 
tion ; *the phenomena of diffraction further invested the particles 
with comj)lex hypothetical laws of attraction and repulsion ; po- 
larization gave them sides; double refraction subjected them to 
peculiar forces emanating from the axes of crystals ; finally dipo- 
larization loaded them with the complex and imconnected con- 
trivance of movable polarization; and even when all this had 
been assumed, additional mechanism was wanting. There is here 
no unexpected success, no happy coincidence, no convergence of 
principles from remote quarters : the jDhilosopher builds the ma- 
chine, but its parts do not fit ; they hold together only while he 
presses them : this is not the character of truth. 

" In the undulatory theory, on the other hand, all tends to uni- 



A ppEXnix c. 235 

ty and simplicity. Wc explain reflection and refraction by un- 
dulations; v;hen we come to tliin plates, the requisite 'fits' are 
already involved in our fundamental hypothesis, for they are the 
length of an undulation : the phenomena of diffraction also re- 
quire such intervals ; and the intervals thus required agree exact- 
ly with the others in magnitude, so that no new property is need- 
ed. Polarization for a moment checks us ; but not long ; for the 
direction of our vibrations is hitherto arbitrary — we allow polar- 
ization to decide it. Having done this for the sake of polariza- 
tion, we find that it also answers an entirely different purpose — 
that of giving the law of double refraction. Truth may give rise 
to such a coincidence ; falsehood can not. But the phenomena 
became more numerous, more various, more strange ; no matter : 
the theory is equal to them all. It makes not a single new physic- 
al hypothesis ; but out of its original stock of principles it educes 
the counterpart of all that observation shows. It accounts for, 
explains, simplifies the most entangled cases; corrects known 
laws and facts; predicts and discloses unknown ones; becomes 
the guide of its former teacher, observation ; and, enlightened by 
mechanical conceptions, acquires an insight which pierces through 
sliape and color to force and cause" (vol. ii. pp. 464-C). 

Such has been the process by which the great inductions in 
physical investigation have been established. In economic in- 
quiry (as I have shown in my third lecture) this circuitous meth- 
od is unnecessary, the ultimate facts and assumptions being sus- 
ceptible of direct proof 



THE END. 



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